Jobs report out today!! Still creating too many lower wage, lower benefit jobs relative to the whole. However, I DID find a bright spot...

The latest jobs report is out (October 2103).  About 204,000 jobs added in October (2013). It surpassed expectations. In the first graphic below are the major categories jobs are slotted into.  I highlighted categories where the job gains were the largest.

One encouraging sign is under "Professional and Business Services" is only 3,300 of the 44,000 jobs created were of the Temporary type. The ratio of  number of "Temporary Help Services" jobs to the total is much lower compared to the previous reporting periods you see listed. It was 17% a year ago (9,000/53,000) and 7.5% (3,300/44,000) in October 2013.  It certainly nets out much better compared to August and Sept of 2013.  Hey, I am trying real hard here to find a green shoot.

Fewer Temporary workers, more Full-time employees.  That is a signal of SOME confidence in the economy on the part of businesses in a category that employs people in higher wage jobs, for the most part. See the image below the jobs number for the major categories of jobs that fall under "Professional and Business Services".

The number of Retail and Leisure/Hospitality jobs created at this time does not really impress me THAT much.  They are generally lower wage, lower benefit jobs.  While it is nice to have them, when one looks at the overall employment picture you want to look not only at the quantity of jobs but the quality of them as well.

Nice graphs showing trends in GDP and the Labor Markets...

Here some valuable metrics that give some perspective on the state of the economy and its short and long(er) term prospects.  These are unusual in that they give a band (shaded BLUE) for margin of error. Having just studied GDP and Unemployment in class, the top right and bottom right graphs are very helpful.

Source:  Wonkblog

Micheal Bloomberg has a soul mate in North Dakota in his fight to rid the world of fat kids.

I see NY Mayor Michael Bloomberg has a soul mate to help him rid the world of rotund people.

A woman in Fargo, North Dakota, said in a radio interview Tuesday morning that she plans on handing out fat letters to kids she considers “moderately obese” instead of candy this Halloween 

“I just want to send a message to the parents of kids that are really overweight,” she told Y-94. “I think it’s just really irresponsible of parents to send them out looking for free candy just ‘cause all the other kids are doing it.” 

In the letter, the woman, identified only as Cheryl, tells parents that it takes a village to raise a child. 

“I’m contributing to their health problems and really, their kids are everybody’s kids. It’s a whole village,” she told Y-94.

From The Washington Times. 

If you like old pictures and ones that tell an economic story, then check this out!

I love old pictures like this one (found HERE with others of early American time periods) for a lot of reasons, but since I am an economics teacher I found the prices of Lemonade (10 cents), Peanuts and Oranges (5 cents) the most interesting.  (Photo is of Las Vegas, Nevada in 1905)

I wondered what those prices would be in current dollars (or cents).  While not a perfect measurement, I used  inflation calculator from HERE and  determined that peanuts and oranges that cost $.05 in 1905 would cost $1.26 in 2012 and a cup of $.10 lemonade would cost $2.54 as measured in current dollars!  Seems kind of expensive and I believe would be considered "luxury goods" in 1905.  

The average wage in 1905 was $.22 per hour.  It would take 23% of hourly income to buy and orange ($.05/$.22 X 100).  Today the average wage is about $20.00 per hour. An orange costs about $.20. A worker today would spend 1% of hourly income to buy an orange ($.20/$2.00 X 100).  Perspective.  Not a perfect measure of standard of living but a reference point.

Interesting to note these items look like they are being sold by the bank itself. Makes sense. That is where the money is, literally and figuratively.

Who owns the Federal Reserve Bank of the United States? Good question that is sort of answered here...

Here is a nice primer from an independent source as to who (or what) "owns" the Federal Reserve Bank of the US ("The Fed" for short).  It is considered a "quasi-governmental" institution---a hybrid privately owned bank with heavy government oversight.  However, the lines are not really all that clear as to where one stops and the other starts.

"...But the Fed is a weird entity when it comes to “ownership”.  It exists due to an act of Congress.  But it is also considered an independent entity because it is not part of the Executive or Legislative branches of government.   The Fed exists because Congress created it, but it doesn’t enact policy measures with any Congressional or Presidential approval.  Politically, this makes it a very independent entity..."

An excellent supplement to the AP Macroeconomics unit on Monetary Policy.

Go HERE to read the whole thing...

Nice graphic on the rise of bottled water and the demise of soft drinks. However, one question remains unanswered...

The NYTIMES has a nice article on the rise of bottled water use and the demise of soft drinks in the US.

"...But bottled water is washing away the palate trained to drain a bubbly soda. By the end of this decade, if not sooner, sales of bottled water are expected to surpass those of carbonated soft drinks, according to Michael C. Bellas, chief executive of the Beverage Marketing Corporation.
“I’ve never seen anything like it,” said Mr. Bellas, who has watched water’s rise in the industry since the 1980s..."

It is a useful example to teach supply and demand, specifically two determinants of demand---a change in consumer preferences and the availability of substitutes.  At a given price the quantity demanded for bottled water is more than is was before and for soft drinks it is less than what it was before. The demand curve for bottled water shifts to the right and to the left for soft drinks as consumers change their preferences for a drink with less sugar, and water is a viable substitute to quench a thirst.

Here is a graphic that accompanied the article showing the movement in the market for the two categories of drink.

I think it is interesting to note that while the consumption of bottled water has leveled off since 2007-08, the consumption of soft drinks has continued to decline, even post-recession.  What are people drinking? The population has increased over this time period.  Are people wising up and just drinking what comes out of the facet for pennies on the dollar? What do you think?

Wanna know the problem with our Federal Budget? Here is it as plain as I can make it plus my take on the solutions. Your welcome...

The Christian Science Monitor has a terrific set of Budget and Debt graphs on its site today.

Below is one I copied and modified to show you the predicament our National Budget is in and why fixing it is going to be difficult.

Total Federal Revenues (Fiscal Year 2012) are on the LEFT along with the sources of those revenues.

Total Federal Spending (Fiscal Year 2012) are in the RIGHT along with the major budget categories that spending occurs.

The YELLOW arrows on the RIGHT show the budget spending that is considered "Mandatory" or "Non-Discretionary  Spending".  The major entitlement programs (Social Security, Medicare, Medicaid, Unemployment Compensation (with some other programs as well), and Interest owed on the National Debt).

The YELLOW arrow on the LEFT shows how much of the revenues it takes to pay for the Mandatory budget items....YIKES! Mandatory spending takes up virtually ALL of the revenues.  See the little GREEN arrow on the LEFT? That is what is left over to spend on everything else with a green arrow on the right.

But is really gets WORSE.  Much, or all depending on your point of view,  of what is termed "Discretionary Defense" is really mandatory.  If you take that whole block of spending and over to the revenue side, well, you can see that we are in a financial hole already and that is not taking into account of ANYTHING else the Federal govt spends money on.

Solutions:
1. Cut/Slow spending on Entitlement programs--also known as "reform". Whatever THAT means. Political death.
2. Raise taxes.  Not political death, but life support required.  Dr Kevorkian on stand-by.
3. Do a little of 1 and 2.  Politically possible. This is called COMPROMISE!  Oh, wait, never mind.
4. Grow the dickens out of the economy so tax revenues will increase, au naturel, without having to raise taxes. Most desirable!  But alas, does not seem on the horizon anytime soon.

If you have any other ideas let me know. I am fresh out.  :)

Are Multiple Job Holders "Crowding Out" new entrants or re-entrants into the job market? See the data for yourself and you tell me...

The Bureau of Labor Statistics (BLS) keeps track of all kinds of employment data from the surveys they do to determine employment/unemployment.  With the release of today's employment report I went looking for some off the beaten track data to see if I could come up with my own take or observation in the report. Found this.

Data on Multiple Job Holders. I clipped the relevant historical data on the different categories of Multiple Job Holders and calculate the change from August to September 2013 (Highlighted in Yellow below)

1. Multiple Job Holders who had a Primary Full Time Job AND a Secondary Part Time Job increased by 69,000 (3,774,000-3,705,000).

2. Multiple Job Holders whose Primary AND Secondary Jobs were Part Time increased by 118,000 (1,889,000-1,871,000).

3. Multiple Job Holders whose Primary AND Secondary Jobs were BOTH Full Time (Yikes!) increased by 25,000 (214,000-189,000).

 Between August and September the number of Multiple Job Holders increased by 212,000.

Were are creating jobs but it appears we are creating them for people who ALREADY have jobs, for the most part.

Are multiple job holders "crowding out" new entrants or re-entrants into the job market?

Not sure of the answer myself. What do you think???

Update to the map comparing US Gross State Product (GSP) to Gross Domestic Product's (GDP) for select countries. Nice reference tool!!

Here is an update to an interesting way to look at the Gross Domestic Product (GDP)  for the US.  (HT: student Gabe Salmon)

It takes each of the States "Gross State Product"--GSP (dollar value of goods and services produced in that State) and compares it to the GDP of an entire country. Click on the image to make it larger OR go HERE for a much larger version.

For instance, the Gross State Product of California is roughly equal to the Gross Domestic Product of Russia.  For further analysis, they provide a population figure for the State and Country.  So, California has a per person ("per capita") GSP of $54,677 and Russia $14,306.  BIG difference on a per person basis.

For a full comparison of world GDP go HERE.

Mexican Government implements a Junk Food Tax. Oh happy day! I get to do a lesson on Elasticity and Incidence of Taxation.

Here is a nice current article that helps teach the microeconomics concepts of Elasticity and Tax Incidence.
Mexico Tries Taxes to Combat Obesity(Wall Street Journal)

• Congress's lower house of Congress passed late Thursday a special tax on junk food that is seen as potentially the broadest of its kind, part of an ambitious Mexican government effort to contain runaway rates of obesity and diabetes.
• The House passed the proposed measure to charge a 5% tax on packaged food that contains 275 calories or more per 100 grams, on grounds that such high-calorie items typically contain large amounts of salt and sugar and few essential nutrients.

The success of this policy will hinge on how sensitive consumers are to increases in the price of their favorite junk food. If they are sensitive to price changes then the the quantity demanded will decrease significantly ("Demand is relatively ELASTIC").  If they are insensitive to the price change then quantity demanded will decrease, but by a smaller amount ("Demand is relatively INELASTIC").

The success of the policy and who will bear the burden of the tax is dependent on the Elasticity of Demand for junk food.

Here are my graphs showing both states of elasticity and how it affects consumer and producers.

Comments from the article suggest that demand is relatively INELASTIC:

Héctor Ortega, a 45-year-old operator of a street stand in downtown Mexico City, predicted that consumers may pull back briefly when prices rise, but then return to their old habits. 

"Just like the cigarettes, people will go back to their old habits," said Mr. Ortega. He said junk food was obviously unhealthy, but it was often the only thing that poorly paid office workers and students can afford. "This is a restaurant zone and the food here is expensive. For some people, these products are the only food available." 

Fernando González, 24, an office worker who frequents Mr. Ortega's stand, is a big fan of sodas and gum, in particular. When the new prices kick in, he said, he won't give up on his favorites, but will probably buy less chips and candy.
"It's a craving, it's an addiction, it's something people enjoy," he said of Mexicans and their treats.

While the Quantity Demanded will decrease the question is will it decrease enough to achieve the policy objective?

Consumers will pay a higher price for a smaller quantity. Producers will receive a lower price for a smaller quantity supplied.

The winner in all this?  The government will gain tax revenue for certain. Are the revenues going for specific public health program(s) to counter obesity?

The snack food levy is part of a bigger tax proposal from President Enrique Peña Nieto which aims to raise the government's non-oil tax collections.

Not....

What do Humvees in Afghanistan today have in common with trains in Mali in 1982? More than you think.

"In Afghanistan, army struggles to wage war with damaged equipment, poor logistics" 

Their fighting season nearly over, members of an embattled Afghan army unit recently inspected their equipment, most of which was in two heaps on their base. There were Humvees shredded by roadside bombs, armored trucks damaged by rocket-propelled grenades and other vehicles in need of repair after hard use in one of the country’s most volatile areas. 

The Afghan soldiers could not fix any of them, and replacements hadn’t come. Seventy-five percent of the battalion’s armored vehicles were out of commission. There were so few Humvees that some soldiers walked for 20 hours to get from base to base.

This article reminded me of my days in the early 1980's when I served  as a Marine Security Guard at the US Embassy in Bamako, Mali (Northwest Africa) and a conversation I had with some consultants for a major train engine manufacturer (I forget which).

The US government purchased (at least one maybe more) a bright shiny new train engine and these consultants were their to train Malians on how to operate it.  They expressed dismay because they new there were no serious plans to train mechanics on how to repair the trains when they needed service and no provisions for spare parts.  The photo op at the commissioning of the train was nice, but they knew the train would run until it ran no more and then pushed to the scrap yard.

Nice to know things have not change much in 30 years or so....

See a couple of useful graphics here on the tragic issue of Human Enslavement around the world. The results might surprise you.

The enslavement of people around the world has been a problem throughout history and no less so today.

The first graphic shows, in nominal terms, the worst offenders by country and some additional numbers for places you would think would not have this issue. Make no mistake---it IS a social problem in EVERY country on earth.  (Click on image to make larger).

Source: The Global Slavery Index 2013

While looking at the nominal numbers above is useful at getting the big picture of enslavement, I wondered if those numbers expressed as a percent of the population would yield any empirical value.

In the chart below the countries are ordered from highest percent of the population to lowest.

When we look at it this way, the top 10 STILL remains the same for the most part (nominal AND in percentage terms) with a couple of exceptions.  Hungary and Poland move in the top 11 (or 11 tied with Russia).  Vietnam, Bangladesh and China move down the list a bit.

Pakistan and India are prominent at the top. There is a large drop off after that.

The US and Saudi Arabia have roughly the same number of people considered enslaved but in percentage terms of the population the problem is 20 times worse in Saudi Arabia.

In nominal terms Peru and Venezuela have fewer enslaved people than Saudi Arabia, but have a significantly higher percentage of their population considered to be enslaved.  That was surprising to me, given the attention Saudi Arabia gets in the general media (deservedly so).

Do you notice any patterns that stick out that I don't see?  Feel free to add in the comments below.

If you want to learn more or need an excellent research resource, go HERE for the full report from The Global Slavery Index 2013

If you believe this has any value feel free to pass this on to your friends and others who are interested in this tragic issue.

Robots, Baristas and Economics Teachers...One of these is not like the others...

I used to worry about robots taking away economics teaching jobs.  Turns out even robots have a limit as to how much boredom they can stand... :)

An army of robot baristas could mean the end of Starbucks as we know it

Starbucks’ 95,000 baristas have a competitor. It doesn’t need sleep. It’s precise in a way that a human could never be. It requires no training. It can’t quit. It has memorized every one of its customers’ orders. There’s never a line for its perfectly turned-out drinks.
It doesn’t require health insurance.
Don’t think of it as the enemy of baristas, insists Kevin Nater, CEO of the company that has produced this technological marvel. Think of it as an instrument people can use to create their ideal coffee experience. Think of it as a cure for “out-of-home coffee drinkers”—Nater’s phrase—sick of an “inconsistent experience.”
Think of it as the future. Think of it as empowerment. Your coffee, your way, flawlessly, every time, no judgements. Four pumps of sugar-free vanilla syrup in a 16 oz. half-caff soy latte? Here it is, delivered to you precisely when your smartphone app said it would arrive, hot and fresh and indistinguishable from the last one you ordered.

Only one thought, host hoc, on the end of the Federal Government shutdown

I wish the politicians in Washington, and the talking heads that support them, would fight just as hard for private sector jobs as they did for public sector jobs.  There were really no caveats regarding the value of former while numerous conditions are placed on the latter.  Why is that?  Suppose that is a rhetorical question...

Is it time to eliminate "Bridges" from the call to spend more money on "Roads, Bridges and Other Infrastructure"? I report, you decide. Numbers you will only see here...

I read a short article (HERE) regarding the "crumbling infrastructure" in the US.  It pointed out that while 1 in 9 bridges in the US are considered "Structurally Deficient" today, that just 20 years ago that ratio was 1 to 5. He suggested that this was a vast improvement and that the emphasis on spending more money on it is perhaps overblown.

The writer linked to the Federal Highway Administration data on bridges so I was curious and decided to dig a little deeper.

The formatting of the data below is poor (my mistake) because of my lame excel skills but the numbers are correct (calculated by my daughter Cara).

Listed are the 50 States plus D.C. and Puerto Rico. Shown are the number of bridges and the number considered "structurally deficient ("#SD")  in 1992 and 2012.  In the second to last column is the percentage increase or decrease in the total number of bridges in each State.  In the last column is the increase or decrease in the number of bridges considered "structurally deficient" (#SD)

If you cannot read the numbers HERE is the link to the Google Doc of same.

Couple of observations.

The number of new bridges since 1992 has increased by a modest 6.07%  but the number considered "structurally deficient" has DECREASED by 46.2% (totals along the bottom).

A few States have FEWER bridges in 2012 than in 1992 (Arkansas, Iowa, Kansas, Louisiana, North Dakota, Ohio, South Dakota)

A few States have MORE bridges considered structurally deficient in 2012 than in 1992 (Alaska, California, Iowa, New Mexico, Rhode Island, South Carolina, Wyoming).

Curiously, Iowa is the only State to appear twice on the above two lists.

California's whooping 91.76% INCREASE in the number of deficient bridges really stands out.  They built only a modest number of new bridges (10% increase) but appears to have not attended to existing bridges on any scale.  Maybe it is the fault of faults---meaning earthquake fault lines.  That can shake things up a bit.

In 20 years we have 34,751 new bridges and a decline of 57,323 bridges that are considered structurally deficient.

Can we do more or is the pace of improvement over time adequate and it is not necessary to spend more than we already do in upkeep and maintenance?