December 18, 2003

A Good Unemployment Insurance Claims Report

Good news about the labor market this week:

Quicken.com - News Center: U.S. Jobless Claims Fall by 22,000; More Than Expected: The number of U.S. workers filing first-time applications for unemployment benefits tumbled last week in a drop that was sharper than expected. Initial jobless claims fell by 22,000 to 353,000 in the week ending Dec. 13, the Labor Department said Thursday. The level was the lowest since the week ending Nov. 1.... The size of the decline was a surprise on Wall Street. The median estimate of 11 economists surveyed by Dow Jones and CNBC called for claims to ease by just 8,000...

It's a very rough and noisy measure, but a UI claims number of 400,000 is roughly consistent over time with a stable level for employment, and a UI claims number of 360,000 is roughly consistent with a stable unemployment rate. Lower than that, and there is likely to be downward pressure on the unemployment rate.

In other news, Paul Kedrosky admonishes me for paying too much attention to this inaccurate and noisy weekly signal. He has a good point.

Posted by DeLong at December 18, 2003 07:23 AM | TrackBack

Comments

It is to your credit that you acknowledge his point and link to him.

Posted by: Keith M Ellis on December 18, 2003 07:46 AM

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Keep the "sighs" and "rahs" coming. Economics needs this hot blooded approach, especially in the time of cold blooded fiscal hackery.

Posted by: anne on December 18, 2003 11:25 AM

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Sigh (to paraphrase BDL). . .There are jobs and there are jobs. But come next November, the incredibly shrinking good-jobs market, the incredibly shrinking middle class, and the Walmarting of America will still be with us.

*First they came for the grocery workers--threatening to take away their medical benefits and full-time/permanent-worker status. The rationale? Walmart does it!

*Now it's the so-called knowledge workers whose jobs are being moved offshore--software engineers earning $75,000-to $100,000. Industry leader IBM is leading the race to the bottom with its plan to move the work of as many as 4,730 programmers to India, China and elsewhere. .

*It's even those legendary Silicon Valley start-ups, whose founding entrepreneurs are cutting costs by moving their research and development teams to China and India.

Check out this Associated Press, Dec. 15 story:
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PALO ALTO Solidcore Systems appears to be the quintessential Silicon Valley start-up, with laptop-lugging, cube-dwelling workers huddling in glass conference rooms and jotting sales strategies on white boards.

But within a year, most of the engineers who make the company's security software will be on the other side of the globe. Even the chief financial officer, chief technology officer and the head of research and development will work out of the emerging Indian tech hubs of Pune and New Delhi.

After launching five start-ups, Solidcore Chief Executive Rosen Sharma said he would never build a company without outsourcing the relatively expensive and highly skilled tech jobs to low-paid contractors or local hires in developing countries.

"The British empire bought raw cotton inexpensively in India and sold the finished goods back in England," said Sharma, 31, who earned a doctorate in computer science from Cornell University. "Our raw material is intellectual power, which is cheap in India, and the finished product, our software, can be sold around the world."
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Are silicon valleyites into burning people (read Sharma) in effigy?

This would seem to be a great issue for Democrats--particularly for Wes Clark. Globalization, the international loss of manufacturing jobs and new-job creation are complex issues--but Clark is a complex and visionary guy. He also taught economics at West Point and recently worked with a start-up alternate energy company.

Clark needn't offer solutions to these problems--nor could he at this point. He merely needs to dramatically and passionately frame the issues--and suggest that the current administration of crony capitalism, secrecy and ballooning deficits isn't likely to take a competent--let-alone-visionary approach to 21st-century economic problems.

But he needs to start talking about these issues now--and not after--the primary season!

Posted by: sylny on December 18, 2003 11:47 AM

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"It's even those legendary Silicon Valley start-ups, whose founding entrepreneurs are cutting costs by moving their research and development teams to China and India."

I'm sure every venture capitalist and angel investor is going to be asking entrepreneurs what their offshore strategy is, how soon work will be sent offshore, and how much of the work.

And startups seeking financing will, no doubt, be setting up offshore connections and writing it into their business plan, so that they can tell investors they expect to save $X and thus reduce the time until break-even.

There may be new, as-yet unimagined jobs that will arise in the future, but I don't see why they would be created in America. If the job is new, then there's no pre-existing American labor pool to draw from. Training will be required regardless of where the hiring is done. So why not move the new jobs where it's cheaper?

Posted by: Jon H on December 18, 2003 02:30 PM

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Just for the record, the UNADJUSTED weekly new jobless claims number was 411,081. See http://www.dol.gov/opa/media/press/eta/ui/eta2003916.htm.

"The advance number of actual initial claims under state programs, unadjusted, totaled 411,081 in the week ending Dec. 13, a decrease of 75,048 from the previous week."


Posted by: Dave Johnson on December 18, 2003 02:44 PM

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