Thanks for the November Jobs Report

Why employment still lags
Report on the number of jobs issued after the summit to work in the White House, shows that Christmas for many workers arrived early. Employers cut only 11,000 jobs, and during that time, unemployment fell from 10,2% to 10,0%. Although this is data for one month, yet it gives reason to believe optimistically that the labor market will develop even earlier than anticipated.

At the same time, this reversal can proceed much more slowly than in previous recovery. Loss of jobs in this recession was the result of a sharp drop in private employment. Reduced investment in the private sector, rather than layoffs have led to high unemployment. Nevertheless, the Obama administration has made little to address this issue, focusing instead on public expenditures, rather than on encouraging entrepreneurship. A good example of the relations of the White House to the problem of employment has become yesterday's meeting, at which there were no interest groups of employers, such as: Chamber of Commerce, National Federation of Independent Business.

The November employment report
The November report in which indicators of job losses were less than expected, was a very pleasant surprise, to which many would react with gratitude. The number of jobs lost over the past two months was significantly revised downwards, which indicates that the labor market appears again ground under their feet. It is likely that it will reach its lowest point before the resumption of moderate growth.

However, in the report are not such good news. The unemployment rate fell from 10,2% to 10% partly due to the fact that 98,000 workers were out of keeping. 62,000 adolescents, approximately 70,000 men from 20 years and more is also not taken into account, however, 35,000 women the same age, entered the lists. These figures reflect the difficulties faced by people during their job search. Because teenagers are much more likely to be unemployed, it has helped reduce unemployment.

Lost their jobs this month were a staple in the list: the builders (-27.000) and industrial workers (-41.000). In the service sector was a small increase (58,000), except retail trade (-15.000), as employees were unable to fulfill the plan holiday sales.

Growth in professional services and business services amounted to 86,000, in education and health 40,000. Demand for temporary service in November amounted to 52.400. Historically, increased demand for temporary service is a harbinger of a reversal of the labor market.

Negative data in this report touched 293,000 unemployed for more than 6 months. Average duration of unemployment also increased from 26.9 weeks to 28.5. Unemployment continues to face difficulties in finding and applying for jobs.

Fewer jobs created, followed by a net loss of labor market
Despite the fact that the news relatively well, the nature of the loss of jobs during this recession suggests that the labor market will recover slowly. Press coverage of general unemployment creates the impression that the increased number of layoffs. This is partly true: the number of layoffs increased over the past year and a half, and it is a very painful process for workers. But the main reason that the decreased number of jobs. As a result, laid-off remain unemployed longer, which raises the level of unemployment.

Bureau of Labor Statistics uses the records of social insurance statistics for measuring the growth and decline of jobs in companies for all time of existence.

Since then, as the recession began, the quarterly loss of jobs has increased by 15% (1,1 million jobs), while, as job creation fell by 25% (1,9 million jobs). The number of laid-off workers of bankrupt companies has increased by 7% (91,000 persons), and the number of workers recruited to the newly established firms declined by 22% (313,000 jobs). As in the famous phrase "the dog that did not bark", unemployment grew mainly due to the fact that not create jobs in the private sector. Research over the past economic downturns suggest that the slow creation of jobs will cause the largest part of the job losses over the entire crisis.

Why the creation of jobs in the private sector snizislos so sharply? Organizations are doing everything possible in order to survive during a recession, including, fire workers and cherish liquidity. The agenda of the politicians in Washington respect the laws on health, air emissions and increase taxes to offset the cost that is not granting organizations confidence in the future. Entrepreneurs refuse to invest because they think that federal legislation may make their projects viable.

Less investment - fewer jobs
Annual private investment fell by $ 316 billion since the start of a recession (20%). This decline has continued even when launched incentives at the level of legislation, which means that the reduction of private investment leads to a reduction in job creation. No Investment Areas in the business will remain low and employers will refrain from opening new businesses, job creation will be on the same low level, and unemployment will remain high.

The data clearly talking about it. Figure 3 shows the annual decline in employment growth and investment in the business. They are very closely linked: the creation of jobs declined, when investment slowed.

Entrepreneurship: ignored response
Obama's initiative related to employment - a package of incentives, but one of the bill is not enough to encourage job creation and private investment. In the context of incentives, new government spending does not imply the promotion of entrepreneurs who start or expand business, if this is not the governments concerned. Hence, this program ignores the root cause of rising unemployment: the lack of private investment. Rather than encourage the creation of jobs in the private sector, the bills increase public spending on long-standing liberal priorities.

The approach of the Obama administration to yesterday's meeting, which was not invited to the Chamber of Commerce and National Federation of Independent Businesses, which represents the interests of employers - a principle which demonstrates a shortsighted approach to the problem.

While entrepreneurs do not want to invest, create jobs and restore the whole system will be very slow. Even if the labor market pushed away from the bottom, the Americans may face a very long recovery. Given that employers must create 125,000 jobs each month to support the growth of employment and avoid rising unemployment, this process is delayed.

Creating new jobs
What creates jobs? Entrepreneurs who have new ideas and successfully turn the plan into action. While entrepreneurial activity remains low, unemployment is high. Nevertheless, the Administration put forward by Obama's political decision to ignore this fact. Federal spending on incentives is not enough to encourage entrepreneurs to venture or business expansion.

Data report today give us hope that the labor market will soon begin to rise, but unemployment remains unacceptably high and people are hard to find a new job. Any recovery will be weak and ineffective, while entrepreneurs remain aloof.



The Wall Street Journal
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