July 24, 2003

Yay! Good Employment News!

The first not-bad news about employment in five months. Of course, it's still bad news for the unemployment rate: 390,000 new unemployment claims a month is not consistent with employment growing fast enough to take care of all the new entrants into the labor force, let alone reduce the numbers of unemployed. But it's still better employment news than we have had in a long time.

FT.com Home US: US weekly jobless claims hit five-month low | By Peronet Despeignes in Washington | Published: July 24 2003 14:06 | Last Updated: July 24 2003 14:06

Demand for new unemployment benefits in the US sank last week to a five-month low, according to an official report likely to bolster hopes that the economic recovery is strengthening.

The Labor Department said on Thursday that first-time unemployment insurance claims had fallen to 386,000 last week - the lowest level since mid-February and well below economists' expectations for a reading around 420,000. They dropped from a revised 415,000 the previous week.

The move below the key 400,000 level is preliminary evidence that the job market is improving, but the figures are volatile and affected by summer seasonal adjustment problems associated with auto factory shutdowns.

But the four-week moving average, a smoother barometer, also sank to a four-month low of 419,000. That suggests that jobs continue to evaporate, but at a slower pace.

Economists warn it could take several more weeks to confirm a turnaround in the job market.

"This is welcome news but it is impossible to tell how much of the drop simply reflects the inability of the seasonal adjustment to cope with the end of the auto retooling shutdowns, and how much is due to the underlying trend", said Ian Shepherdson, chief US economist at High Frequency Economics in a morning note. "The retooling effect will not wash completely through the claims numbers for another couple of weeks; in the meantime there is still a chance of upside surprises - next week's claims could easily be back at 410k or so".

Posted by DeLong at July 24, 2003 09:48 AM | TrackBack


Brad DeLong - I wonder if you are paying enough attention to competition for American jobs from China and India. My sense is that both manufacturing and service sector jobs have been and will be "moving" to China and India following several years of sharply rising foreign investment in these countries and a pool of well skilled labor.

The loss of jobs to China and India strikes me as no longer low paying jobs, but high paying jobs. The NYTimes reported this week that IBM was discussing the need to move high level jobs to Asia.

Posted by: anne on July 24, 2003 10:37 AM


New Reality Is Leaving Growth in the Mire

FOR nearly 29 months, the nation has struggled through a recession and a weak recovery. That is a long struggle, a new form of hardship for many Americans, who are tantalized with incessant forecasts that a decisive upturn is about to happen. But as the months wear on, the dogged optimism detaches from reality.

For starters, the forecasters seem not to grasp how much the American economy has deviated from the standard business cycle and the standard cures. A major reason for the deviation is the mobility of American companies, particularly the ease with which they now shift operations to China and India....

Posted by: anne on July 24, 2003 10:40 AM

Why are we still granting special employment visas for software specialists from India?

Posted by: jd on July 24, 2003 10:50 AM

Irrational exuberance to report that things are getting better simply because they are really getting worse at a somewhat slower rate.

Posted by: Chuck Nolan on July 24, 2003 11:15 AM

"Why are we still granting special employment visas for software specialists from India?"

Here's a crazy thought:

Because the software specialists are doing work that is valued by companies located in the United States?

Posted by: achilles on July 24, 2003 11:26 AM

Because Indian software specialists are cheaper than American software specialists, even when you have to account for the legal expenses involved in bringing them over here.

This is a touchy issue with me. I'm not sure where I stand on it at all...generally speaking, I'd be for loosened labor migration rules, but I've seen many of my friends in that industry lose their jobs and not be able to find one after the fact.

What is really bothersome is that it appears that the industry hasn't gone away so much as started shopping elsewhere.

I'd be a lot more comfortable with this if the software industry appeared to be recruiting here at reduced wage levels instead of shipping in people from overseas.

Posted by: J.Goodwin on July 24, 2003 11:33 AM

"Why are we still granting special employment visas for software specialists from India?"

- Because the software specialists are doing work that is valued by companies located in the United States? -

- Because Indian software specialists are cheaper than American software specialists, even when you have to account for the legal expenses involved in bringing them over here. -

My guess is that American software specialists could easily fill industry needs, but they are more expensive. What is the point of importing workers for high salary work at a time when American workers are struggling to find just such work? We do have an employment problem, and we have to attend. Industry needs seem to be far easier to tend than worker needs. Wonder why?

Posted by: jd on July 24, 2003 11:59 AM

Oh, Brad, I knew you were in for a spanking when I saw how you treated the jobless claims news. This is a very tough crowd when it comes to jobs data. It is not acceptable to note signs of things getting worse more slowly, much less of things getting better. No second derivatives, please. Just tell me the level.

There is hope for those who insist that signs of improvements in the labor market are sure to end in tears. The BLS warned (as Greenspan did before Congress) not to put too much faith in the July and August claims data. Retooling in the auto and other heavy industries takes place largely in July and August. Since the timing of retooling within that period is not very consistent, seasonal adjustment factors may inappropriately suggest improvement (the latest data) or deterioration (last week of June, week of July 4) in the labor market.

One way around short-term seasonal distortions is to look at smoothed series. For instance, the 4-week average of claims is at its lowest level since late February and has been trending lower since the week of May 2.

Oops, now I'm in trouble.

Posted by: K Harris on July 24, 2003 12:03 PM

The paperwork needed to get an H-1 is pretty onerous: ask the HR people at your workplace. You have to pay 'market wages', there is a cap of ~100,000 or so (declining to 65,000 this year) and you have to provide certification to the labor department that U.S. workers are
not available to do the job you are bringing the H1 worker in to do.

U.S. software companies brought in lots of software programmers during the boom, when such shortages were easy to document. If I was Bill Bennett I would wager you a tech worker's monthly salary that the number of H1Bs has either gone down (or at least that the excess demand has declined) dramatically - making foreign software programmers a symptom rather than a cause of the decline in technology employment in the United States.

OBTW, a pre-emptive please, Mike, do not compose a response to me.

Posted by: achilles on July 24, 2003 12:06 PM

Nice note on visas.

I “believe” the number of visas offered is as least as high now as in 2000. Probably I am making too much of this. Still, the points about job loss to China and India need consideration. Labor really may need to be somewhat cushioned against such displacement.

Posted by: jd on July 24, 2003 12:36 PM

achilles writes: "You have to pay 'market wages', there is a cap of ~100,000 or so (declining to 65,000 this year) and you have to provide certification to the labor department that U.S. workers are
not available to do the job you are bringing the H1 worker in to do"

That's the H1-B (or H-1B) visa. There's also an L1 visa which doesn't require that the person be paid 'market wages'. That seems to be more popular with employers now. I suppose it's good for bringing people in to be trained by the Americans about to be replaced; the foreign worker is then sent back home to continue working and possibly to train others.

The L1 is primarily intended for bringing employees in from subsidiaries in other countries. IBM would use one to bring a researcher from a Japanese IBM lab in to work at IBM Almaden.

I think I've read that there's a loophole where a company will contract out some function to another company. The second company has lots of employees in cheaper countries. Those cheaper employees are brought in and work onsite, in America, at the first company's locations.

In other words, company B keeps an inventory of cheap offshore employees who can be brought in to the US and contracted out to company A. These workers are brought in using L1 visas, and their pay is below the US market rate for their job. Company A doesn't have to deal with the immigration issues, because the workers are employees of company B; it handles the legal stuff, and presumably does so much of it, so often, that it doesn't take long to get a body into a client company. It'd be quick because Company A would just ask for a Java programmer, not a particular Java programmer, so Company B can just provide the first Java programmer whose visa is approved.

Also, the L1 visa has a restriction that the person has to leave the country if the job goes away. Because the job at Company B doesn't go away, the visa holder doesn't have to leave when a Company A decides to cancel a contract; Company B can just shift him or her to another client contract.

Posted by: Jon H on July 24, 2003 01:39 PM

It seems to me that if we stop IBM Japan from sending workers to come and do the work at IBM USA then pretty soon the work will be done at IBM Japan.

I don't know enough about the trading of workers loophole in the L1 program you talked about, though. IF what you say is right it does seem to violate the intended purpose of the L1 visa so it should either be cracked down on, or the L1 law changed to make it allowable.

I personally happen to believe that the case for "exporting" and "importing" jobs is just as strong as the case for "exporting" and "importing" goods. I also believe that countries who restrict outsourcing of jobs for short-term gains are just as short-sighted as those who retrict trade for short-term gains.

This means that we would probably see some kind of anti-foreign worker law appear on the books in the next 12 months from the Bush administration.

Disclaimer: Once again, Mike, I really would prefer not to hear your response to anything I say here.

Posted by: achilles on July 24, 2003 03:04 PM

Isn't overseas job emigration inevitable in the long run? It's not the level of globalization that is present now, but the character of it that guarantees that it won't slow down. Wars could previously disrupt trade flows, but much less so now, with the current level of technology and communication (the channel through which these white collar jobs will flow).

American workers will just need to change, and faster, to stay on top of this increasingly big pyramid. I think inequality in the US will grow, but the standard of living will stay about constant overall, as everything becomes cheaper.

What do they call it, harmonization? Those sectors that face competition from trade (a growing % of job categories) will see their wages and profits depressed. I really think it is a bigger structural adjustment than we realize going on here. And America will face a long (ten-year?) economic stagnation until the next big thing comes along (like PC's in the 90's). But even then, our ability to extract rents from being the first on the block selling the new stuff will decrease, due to the same technology-aided diffusion, and increasing education/modernization.

Don't get me wrong, I'm a free trade fan. And protectionism probably wouldn't work anyway, aside from it's costs. What I'm gonna do is learn to speak Chinese. :)

Posted by: andrew on July 24, 2003 03:44 PM

Some NOT so good news and a question?

I wonder it all of Bush's campaign contributors like, actually expected results from their hefty donations that they gave or are giving Bush and company??? I mean they gave Bush a lot of money-- a hell of a lot money but he has no business concept of how to deliver the goods. And you ask me I’d say Bush is really a very bad business risk – like he was for the Harkin oil company.

Bush and Company really do not seem to understand the first thing about mutual benefit scenarios-just the extortion type policies-like the type practice by Al Capone (buy our insurance policy are something really bad might happen to your store).

Anyways this bit of news:

Oil groups snub US on Iraq deals
Financial Times (subscription), UK - 29 minutes ago

Some of the world's biggest oil companies have warned the US administration that they will not make large investments in Iraq while the security situation...

It's not subscription however so Here

Some of the world's biggest oil companies have warned the US administration that they will not make large investments in Iraq while the security situation remains so dangerous.

The reluctance of the industry to invest long-term is a setback to US efforts to revive the oil industry and rebuild the economy. Industry experts estimate it would cost $30bn-$40bn to tap the full potential of Iraq's vast oil deposits.(maybe they need more taxpayer funded incentives, ya think?)

It is understood high-ranking US officials recently met some heads of international oil companies to sound them out about when companies would be willing to start investing. Industry executives expressed concerns over the lack of security and political legitimacy. They say the US-backed authority, so far, had too little representation.---(OIL folks gave Bush a lot of money and they would have us believe that they had no input? What about Cheney's energy task force-please)

US inability to bring security and a legitimate transitional authority to Iraq has forced oil companies to shy away from setting up all but a low-level presence. Even services companies such as ExxonMobil and ChevronTexaco of the US and BP and Royal/Dutch Shell have been disappointed at the pace of progress.

NOW I know (because it was in the news) that Bush has already handed out the oil contracts (Chevron being a big winner) but Iraq must look like a hell of a very risking investment right now. In fact things look like they are getting worse not better and the death of Saddam boys although showcased to the max seem to have had very little impact on how Iraqis feel about continued American occupation.

ALL the bogus stupid intelligence stuff and Bushie own bungling too – since I think Bush miss his window of opportunities to show instant good faith to the people of Iraq seems to collided. Did the oil companies think Iraqis would throw roses too? But the oil companies did get to take Americans to cleaners at the gas pumps for the last 3 years. I guess they're should be happy about that much anyway.

Posted by: Cheryl on July 24, 2003 03:45 PM

I mean:

I guess they should be happy about that much anyway.

Posted by: Cheryl on July 24, 2003 03:50 PM

It's not subscription however so Here

What happened to the hyper text controls?


Posted by: Cheryl on July 24, 2003 03:57 PM


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Name of Exam. Board/University Subjects Percentage
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Name Of Course Name of Institution Grade
1 Diploma in Computer Hardware Engineering MICRO ED. (A wing of GILARD ELECTRONICS Ltd.), Calcutta. 5.5(GPA)
2 Diploma in Computer Application COMPTEK INTERNATIONAL, (Education wing), RANCHI A+
3 Diploma in Information Technology (1st semester) Manipal University A


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Worked on


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