Semi-Daily Journal

Have help-wanted ads shifted to the internet significantly enough to affect the index? Does the index take this into account? It appears from you article that the index doesn't consider internet ads.

I read that a Canandian help-wanted ad index has been discontinued, because so many postings have moved to the web, that the old metric became worthless.

Followers of the help wanted index see ocasional "reports from the field" in which employers make it pretty clear that they don't use newspaper ads to the extent they once did, due to the greater coverage and lower cost of the internet. It is pretty much a sure thing that the want ad index has an underlying downward trend that reflects a shift toward the internet.

George and CalDem beat me to the punch with the internet ad query. I wonder if someone will try to modenize Beveridge's Curve for this new technology?

George and CalDem beat me to the punch with the internet ad query. I wonder if someone will try to modenize Beveridge's Curve for this new technology?

As proxies go, I'd say this one is rather weak. Here's why:

1) There are a variety of substitutes for newspaper advertising these days (internet, employment agencies at every level of the workforce from unskilled temps to high level executives, etc.). Plus many companies have expanded their employee referral systems in the last decade or so. In short, there are lots of sources of candidates now that didn't used to exist.

2) Advertising job openings in newspapers carries huge hidden costs for employers, who need to allocate the time of employees to read and screen resumes for each position advertised. A typical big city classified gets hundreds, if not thousands of responses, most of them from people who are unambiguously unqualified. Somebody has to sort through the dross, and at many companies, send out an acknowledgement mailing to each applicant. If a company runs an ad that generates 1,000 unqualified responses, each of which takes 10 minutes of employee time to properly screen, evaluate and acknowledge, and that employee costs $25 per hour, then the company incurs a $4,100 cost just to deal with the paper storm. And that's not even counting the fact that when a company runs an ad it signals to job seekers that it is hiring and managers and executives at all levels start getting phone calls from desperate job seekers who are trying to plead their case. Again, this incurs huge costs.

3) Placing public job opening classifieds alerts competitors to important strategic developments. If I see that my chief competitor is trolling for skilled mechanical engineers, I'm likely to beef up my employee retention efforts to counter their efforts, lest they poach my best employees. If they instead work through a discrete headhunter, I won't know what's going on until my best engineers resign. The competitive intellignece staffs at big companies scan newspaper classifieds regulalrly for clues as to their competitors' intentions.

4) Newspaper classifieds are often run as a matter of course when there are no openings at all. This allows the company to continue to collect resumes in case a superstar candidate shows up on the market, and it allows the company to maintain "mindshare" among job seekers. This is a costly activity, and an easy thing to cut out of the budget in lean times.

5) Similarly, newspaper classifieds are often run not so much to generate candidates but to do CYA work regarding workforce diversity. The idea being that if a position is published in a big paper, the chances of a lawsuit if a white male is hired are lower, because the company has another bullet point with which to demonstrate good faith and openess in the hiring process. Again, this is costly and easily cut in rough times.

6) This may not be a criticism of the index, but I'd be interested to know how media consolidation has affected the methodology. Perhaps it used to be the case that get an ad posted on the website of Paper A, you had to run a print ad in paper A. But if Paper B buys Paper A, then you might be given the option of putting an ad on the websites of both Paper B and Paper A if you run a print ad in Paper B, which you were going to do anyway. Thus you would be less likely to run a print ad in Paper A, cutting your total number of print ads for the same job from 2 to 1.

7) Employers are increasingly wary of the value of big city newspaper classified advertising. I think you're seeing a huge migration of want ads from the general newspaper classifieds into the classifieds sections of industry journals and trade papers. These types of publications are less expensive, and help solve some of the problems of #2, above, as the audience is more targeted. The internet has hastened this trend, as more people who are out of work have access to the classified of trade papers (traditionally people took these publications at the office, and when they lost their jobs, they lost access; but now they can go on the website of the trade paper for free from home).

Now, these points do NOT explain the month-to-month variation in the index. These are macro-level trends, mainly. Things are indeed bad now in the labor market. But these points DO suggest that the labor market isn't as bad as its been since 1961.

Weak after weak new claims for unemployment insurance run over 420,000. Long term unemployment is high and increasing. There is just no sign of meaningful net job creation. We have shed more than 2.6 million jobs in little more than 2 years. These last 3 months we shed 500,000 jobs. Get it folks, the job market is poor.

I know, now that the tax cut is passed all will be fine and dandy, but I really am worried about job creation.

Talk about a Freudian slip: WEEK is not WEAK. Good grief!

Anne

All this talk of Beveridge curves is making me thirsty!

Okay, I really deserve to be shot for that one.

So... what is the biggest factor in the determining the shape of the Beveridge curve? Is it primarily determined by frictional unemployment and temporary scrambling of jobs for workers and vice versa, or is it mainly determined by structural mismatches in the labor market (too many web designers, not enough nurses)?

This is the first time I've heard of this statistic.

Yes, but you should have counteracting long-term upward trends in the index as well...

The number of nonfarm employees has more than doubled in the US since 1961. More employment positions indicates that the number of job openings at any one time will be larger than it was then.

So, if newspaper advertising is only being carried about at 50% of the rate it was in 1961, then you may very well have a lower number of vacancies now than you did then.

Unless the statistic is already adjusted for that sort of thing.

I agree that there's good reason to believe that newspaper want ads are no longer a reliable index. Nevertheless, I think we're all aware that the unemployment rate isn't the whole story, either.

I'm struck by the fact that we're at 1995 levels when my personal experience and impression was that 1995 was a perfectly fine year and 2003 is a continuation of a cataclysm. Of course, I'm in Austin and worked in the software industry. I've personally never been more pessimistic about jobs in the last twenty years, but admittedly the meaningfulness of that sentiment is strongly contextual.

Interestingly, anecdotally (I've not independantly verified this) housing prices locally have started to fall.

Off topic:

Brad, could I persuade you to remove the fixed width for blog entries, in addition to maybe decreasing the font size? :D

There is no reason to think the American job market is anything other than awful, and there is little reason to think there will be a distinct turn for the better these coming few months.

Productivity is rising fast enough relative to demand to satisy consumers. There is no need for more workers and will be no need if demand does not grow faster. What will spur demand? Consumers are spending fairly freely, even with the tax cut there is little reason to expect much more from consumers. Why should employers invest more in capacity when capacity is running 75%? Then, where is more demand for workers coming from?

I too am worried.

http://epinet.org/content.cfm/webfeatures_snapshots

The long goodbye—workers staying unemployed longer

Numerous commentators have pointed out that this recession and jobless recovery is considerably milder than in previous cases. Unemployment, which broke 10% in the early 1980s recession, has not gone above 6% in this recession. Yet, as the figure above reveals, the lower unemployment rate in the current downturn is combined with historically lengthy spells of joblessness, leading to an unusually wide gap between the unemployment rate and the average length of time spent unemployed. As explained above, the 6% unemployment rate understates the extent of labor market weakness in the current economy....

> Consumers are spending fairly freely, even with the tax cut there is little reason to expect much more from consumers.

I don't mean to be rude, but when I read this, my reaction was, "JD must not be married." :)

I wish some enterprising economist would 'invent' an enhanced unemployment statistic that took into account the 'value' of the jobs lost.

If such a measure existed I think this current recession would be the worst on record since the depression.

It seems like a lot of the jobs lost in the past two years have been relatively high salary positions.

Why not just look at the output gap, Bram?

>I wish some enterprising economist would 'invent' an enhanced unemployment statistic that took into account the 'value' of the jobs lost.

When I cited the concept of value here, on another thread comparing the "value" [and pay] of different types of labor, I was ridiculed as an insensitive elitist.

Don't say you weren't warned.

Perhaps there will be a significant incxrease in consumer spending out of federal tax savings in coming months, but there are countering budget cuts being made at state and local levels through the country that may mute the effect. Also, we are an aging population that is saving short. Middle class baby boom families have to add to savings meaningfully to meet retirement needs. I am just not convinced the tax cut will have the sort of 1.5 percentage point GDP growth effect Morgan Stanley is projecting.

Also, be clear, I think the tax cut bill was terribly structured and will surely have an awful deficit effect and fiercely skews the federal tax system toward the richest families.

JD

Agreed about the need for additional savings. The extremely low interest rates on bonds makes the problem all the more serious. Families are net creditors. The low interest rates are reducing incomes, and will do so for some time to come, especially for older families. This problem is serious and can not be discounted simply because homes are rising in value. Cashing in added value of homes for consumption creates its own problem for families.

>The low interest rates are reducing incomes, and will do so for some time to come, especially for older families.

So you'd support a hike in interest rates? Since "the rich" hold most debt claims on society, wouldn't this merely enhance the negative wealth transfer effects you decry in fiscal policy?

Blah blah Buckola

The idea of ever responding to such drivel is absurd. Now, make a snide comment about women.

>a snide comment about women.

Where? Please cite or apologize.

Radical-Republicans are Radical-Republicans are Radical-Republicans.

www.cpbb.org

August 31, 2003

In response to the finding that the new tax-cut law leaves out millions of low-income working families with children, the White House and some other supporters of the legislation have argued that these families do not pay income taxes and have said or implied that everyone who does pay income taxes will receive a tax cut.[1] President Bush declared several weeks ago in promoting his proposal, “My jobs and growth plan would reduce tax rates for everyone who pays income tax.”[2] White House Press Secretary Ari Fleischer stated on May 29 of the new tax-cut law (which includes all of the provisions of the President’s plan in full or in part), “This certainly does deliver tax relief to people who pay income taxes.”

Over the past 10 days, many news accounts of the new tax law have reported as fact the claim that everyone who pays income taxes will receive a tax cut. Similarly, the Republican National Committee website asks who will benefit under the law and then answers its question: “Everyone who pays taxes.”

New analysis by the Urban Institute-Brookings Institution Tax Policy Center demonstrates, however, that such claims are not accurate. The Tax Policy Center analysis shows that 8.1 million lower and middle-income taxpayers, who pay billions of dollars a year in income taxes, will receive no tax reduction under the legislation. (“Taxpayer” is defined here as a tax filer who pays federal income tax.) These taxpayers also would have received no tax reductions under the Administration’s plan.

The 8.1 million figure includes 5.6 million taxpayers who pay more than $250 in income tax. The Tax Policy Center data show, in fact, that nearly half of all Americans who pay between $250 and $750 in income tax — 45 percent of such taxpayers — will receive no tax cut under the new law. The 8.1 million taxpayers who will receive no tax cut also include 1.8 million taxpayers who pay more than $1,000 in income tax.

The 8.1 million taxpayers left out of the legislation are 44 times the number of taxpayers who have incomes exceeding $1 million. Taxpayers with incomes over $1 million will receive an average tax cut under the new law of $93,500 in 2003, according to Tax Policy Center data. (Some 184,000 taxpayers have incomes of more than $1 million.) The taxpayers with income exceeding $1 million will receive approximately $17 billion in tax cuts in 2003 alone....

anne: Glad you support further tax cuts. Perplexed at the "news from the future" dating of your post.

The comment about spending and being married was what I had in mind. Could not be a stereotype directed at husbands. But, I should apologize anyway and I do....

Apology accepted.

The worst such imbalance I've ever seen in a married couple was a pairing where the woman made big bucks on Wall Street, and the stay-at-home husband treated himself to the finest wardrobe, new cars, etc.

Always did support tax cuts for working or middle class households. Even proportional temporary tax cuts for all would have been far better than the welfare-for-the-rich tax cut we now have.

>welfare-for-the-rich tax cut we now have.

Welfare is the transfer of someone else's property. An income tax cut is allowing someone to keep their own property.

One can dispute relative burdens, but I don't think an income tax cut can fairly be described as "welfare".

Bucky

I have to keep a clearer eye to a sense of humor.

Bucky,

"Welfare is the transfer of someone else's property. An income tax cut is allowing someone to keep their own property.

One can dispute relative burdens, but I don't think an income tax cut can fairly be described as "welfare". "

How about if the tax cut is paid for by borrowing money that someone else will have to repay? Isn't that a "transfer of someone else's property?" If you don't think so, maybe I could borrow your credit card for a while.

The reason we live as happily as we do is largely because we live in a country whose policies have been designed to assure our collective well-being. The taxes I pay defend our happy lives and hopefully provide opportunity for families who need opportunity. The tax cut we now have is rewarding the rich at what will be the increasing expense of the rest. Welfare for the rich, for sure.

>How about if the tax cut is paid for by borrowing money that someone else will have to repay?

Taxes and debt finance *spending*.

Some of that spending is welfare, even "welfare-for-the-rich" subsidies (which I oppose as much as you do). Changing the mix of taxes and debt isn't welfare, though.

By the way, I believe the Fed has correctly taken decisive action in lowering interest rates repeatedly to spur GDP growth. But, I am still worried about the income problems that this brings in households where interest income is important. At present, the important problem is to bring GDP growth to a level that generates significant job creation. Have we provided for that with the tax cut? I hope so. No matter how well this tax cut works in the short run, we are going to be faced with a most difficult private and public saving shortfall in coming years. My complaint about Alan Greenspan is never with monetary policy, but with support for fiscal policy that leaves us with huge structural deficits.

>My complaint about Alan Greenspan is never with monetary policy, but with support for fiscal policy that leaves us with huge structural deficits.

Actually, in his recent testimony, Greenspan scolded both parties for abandoning fiscal/spending restraint, and the "paygo" aspects of budget planning.

Brad has made this point before, but it's worth repeating: as long as productivity is growing at a greater than 4% rate, the odds of the economy creating enough new jobs to reduce the unemployment rate are very slim.

Now, it is certainly true that productivity growth is a greath thing overall and in the long run, but then again, as Keynes noted, in the long run, we're all dead.

personally, i think that thanks to the bush-snow weak dollar policy and the bush tax cuts, the likeliest condition over the next several years is stagflation - modest growth accompanied by increasing inflation - which is not a recipe for job creation growth either.

"Changing the mix of taxes and debt isn't welfare, though."

Changing the tax system from progressive to regressive sure looks like welfare for the rich to me. And as you know, that's exactly what the last two rounds do. It's what they were explicitly *designed* to do.

But no matter. If the theory behind all these Buffett subsidies doesn't pan out, there will be a correction. I rather suspect it won't look like the fantasies of Delay and Thomas.

>Changing the tax system from progressive to regressive sure looks like welfare for the rich to me.

One can make the case that the new code is less "progressive", but the notion that it is regressive is absurd. And making such claims makes it easy for thoughtful lurkers to conclude that the left's critique of Bush is based on emotion and not reason.

bucky, when after-tax income improves more for the top 1% of wage earners than it does for anyone else - that is, when after-tax income distribution tilts further towards the highest income earners - what should we call it?

Making a system less progressive is not the same thing as making it regressive. The US income tax code does not net transfer money from the bottom income groups to the top. Re-labeling things all the time is the mark of a political movement that needs to hide its failures or agendas.

OK, let's call it a regressive tax cut and call it a day.

and no, bucky, the people who are hiding their political agenda are the ones who supported this misbegotten tax cut.

>...the people who are hiding their political agenda are the ones who supported this misbegotten tax cut.

I never contended either side was fully candid in its advocacy.

Statistics Canada recently discontinued the long running statistic know as the "help wanted index", which was a measure of ads in newspapers.

I beleive this was because of the rise of new technology. If you need more information, I beleive Statistics Canada had a press release, and they also have a media affairs guy you can talk to.

'One can make the case that the new code is less "progressive", but the notion that it is regressive is absurd.'

Oh dear, Bucky, that was bait. And you took it, hook line and sinker. I hoped you wouldn't. You need to evaluate the integral of the overall tax burden over the entire taxation domain; not just income taxes, but all those local taxes too you know so well living in Manhattan. The distribution produced by this exercise is easy to find, but the baseline before mod #2 was roughly "flat".

Perhaps you're in the top 1%; you can calculate your newfound riches here:

http://maxspeak.org/gm/archives/00001208.html

There is no possiblity that I am putting/will put an equal amount (% basis) into the tax maw as the fellow riding the back of the garbage truck that just rolled by my window, e.g. Statistical legerdemain notwithstanding. I am all for fairness, but there is no need to lie about the relative burdens. Nor will I get into a supportive data link posting contest. If you need to believe I am not being hosed enough, that's fine. Vote for Kerry in 04, and Hillary in 08. It's your right.

Anne,

Can you help me clear up a bit of bewilderment over the data on interest income? I see no reason that your assertion of a problem from falling interest rates for creditor households should be wrong. When I check the personal income data, I find that there has been only a 3.7% drop in interest income paid to individuals since the peak in December 2000. The current level of interest income is above that paid in any period prior to mid-2000. What’s missing? Interest rates were trending lower for much of the 1990s, but payments to households were rising. Now, interest rates are down, but payments to households have been pretty steady for the past couple of years. Got anything?

>interest rates are down, but payments to households have been pretty steady...

Increased principal amount combined with concentrations in riskier assets, like junk?

Bucky,

You get up way too early, probably a reflection of you profession.

That was my guess, too. Dump stocks, buy CDs, keep the monthly interest income up by increasing the principle. I don't know that. Anne seems to take in interest in (hmm...how to get around saying "an interest in interest"... can't) interest income, so I'm hoping for better than my guess.

Julian Elison,

For a quick look at what the Beveridge Curve is and what it looks like for the US, see:

http://www.bos.frb.org/economic/neer/neer1997/neer597a.pdf

Can you help me clear up a bit of bewilderment over the data on interest income? I see no reason that your assertion of a problem from falling interest rates for creditor households should be wrong. When I check the personal income data, I find that there has been only a 3.7% drop in interest income paid to individuals since the peak in December 2000. The current level of interest income is above that paid in any period prior to mid-2000. What’s missing? Interest rates were trending lower for much of the 1990s, but payments to households were rising. Now, interest rates are down, but payments to households have been pretty steady for the past couple of years. Got anything?
Thinking, but Bucky at least partially answered the question. Reinvesting interest payments from bond funds, plus increased investment in bond funds, should account for a steady to rising flow of interest income to households. This will continue to the end of the bull market in bonds. So far treasury, corporate, and municipal bonds have reached bull market highs between May 23 and May 29. The bull market began on September 30, 1981. The problem will come on the downside which imay easily be long and deep. Also, the problem will come as households needs to use interest income and we are quickly approaching that time.

http://www.nytimes.com/2003/05/31/international/asia/31JAPA.html

May 31, 2003

Frugal Japanese Dig Into Savings
By KEN BELSON - NYTimes

TOKYO -— In more prosperous times just a few years ago, Kiwako Kaiyama and Kiyoko Kitamura looked to a future of kicking back on their husbands' salaries. Instead, to make ends meet, the 40-something housewives have had to cut their spending, take part-time jobs and — shockingly, for Japan — dip into their savings.

For decades, the Japanese routinely socked away 10 to 20 percent of their incomes, earning a reputation as one of the world's most frugal people. In those years, Japan badgered the United States about its wasteful ways and trade deficits, even as Japanese companies benefited from selling Americans cars and electronics.

But a decade of recession here and a rapidly aging society are changing all that. Japan's household savings rate fell to a postwar low of 6.9 percent in 2001, the last year for which complete figures are available, from 11 percent in 1999 and 14 percent in 1990.

Based on preliminary data, the savings rate fell another two percentage points in 2002, economists said. Within a decade, if current trends persist, Japan's savings rate will hit 1.5 percent, according to HSBC Securities, pushing it below America's, which rose to 3.7 percent in 2002....

> So far treasury, corporate, and municipal bonds have reached bull market highs...

That wouldn't show up as "interest income" though.

Reinvesting mutual bond interest income through the bull market does seem to answer why interest income has not fallen as rates have fallen. We have been buying more bonds as rates have fallen.

There was what appears a short lived buying spree of high yield bond funds from November 2002 to April 2003, but this buying was late in coming and not enough to have kept interest income up. Reinvesting in investment grade bonds and adding to mutual fund bond accounts is the answer.

Watch out for the end of the bull market in bonds, and the growing need to live off interest income.

The Times piece sidesteps the fact that Japan has nothing like our public-funded social safety net, so individual Japanese have to save for their own retirements.

Hence, savings rose as Japan's baby boomers aged, and now that they're entering their retirement years, those savings are getting drawn down.

Agreed, but we had better be concerned about the same saving depleting effect in America in coming years. Remember households are saving short and the Federal budget will be in a sharp deficit for years to come.

Again, the aging populations of Germany and France present saving problems. Here there is more ample household saving and a fine social safety net, but funding the social safety net will be quite a task.

Since December 2000, the U.S. Bureau of Labor Statistics has published monthly job-openings data from the new Job Openings and Labor Turnover Survey (JOLTS) collected from a sample of 16,000 establishments. The web site is http:// www.bls.gov/jlt/ There is an article describing the survey in the December 2001 Monthly Labor Review. These data are not based on help-wanted advertisements.

The JOLTS data indicate that job vacancies peaked in April/May 2001, declined throughout 2001, rebounded during the first eight months of 2002, declined again in the 4th quarter of 2002, and have shown a modest upturn so far in 2003.

What puzzles me is why investors have bid long term bonds so high. The danger of a sharp decline in bond prices makes holding long bonds a strange investment just now. I would have sold all treasury and municipal bonds, and investment grade corporate bonds with over a 5 year maturity in the last month. Perhaps a GNMA portfolio with a 2 year duration makes sense. I do not like this bond market!

Diseconomic buying: Portfolios that must deploy cash, meet a duration bogey, or position dollar holdings, regardless of yield.

Pension funds, insurance companies? Yes, they may have to buy investment grade long bonds to get any yield.

Nice points Bucky!

Don't forget the Chinese and Japanese central banks.

Yes, again. There has been massive dollar buying by China and Japan and other Asian central banks. Competitive devaluation would seem to be here. I hope the rise in currency value will not be a problem for Brazil. This stuff is tricky. Good grief.

I've been called a "liar" by "Bucky Dent"; he has no further credibility. Rats.

>You need to evaluate the integral of the overall tax burden...

The bottom half of the income distribution, as I was told on this forum, pays no income taxes. The top 1% of income distribution pays, roughly, 1/5 of all the income taxes.The bottom half of the income distribution receives far far more from the state than the top 1%. Calling our tax code regressive is simply untrue. The only place the word "liar" appears on this thread, besides this sentence, is in your post.

Bucky,
The state provides a very large bennefit to the 1% - it keeps the 99% from taking it away from the 1%. In my book that is of real value beyond accounting. Check out the "untidyness" post SH.

Law enforcement benefits all citizens. The poor always suffer more than the rich from street crime. The rich can, and do, live in gated communities or doorman-guarded buildings, effectively providing for their own security AFTER paying taxes to provide the cop-on-beat.

Dilbert -- a very, very cynical view of our society that is.

How do people feel about the idea that it is the values and moral fiber of ordinary citizens that keeps our country functioning, together with policing of a small (<1%) "criminal class", and not mass political repression of a large majority of our country (which the 99% figure Dilbert provided suggests)?

Personally, I think law works at the margins and the police can only do so much in controlling unlawful behavior, but I'm interested in what the rest of you think.