Business news from the Fredericksburg region.
Is the increase in unemployment bad? No, it’s good!
EVERY CLOUD has a silver lining if you look hard enough, and vice versa. With apologies to Sam the Sham and the Pharaohs, here’s a little reprise of “Oh That’s Good, No That’s Bad.”
U.S. unemployment climbed from 8.1 percent to 8.2 percent in May.
Oh, that’s bad.
No, that’s good. One reason the unemployment percentage rose: Many people who had given up looking for a job were heartened by this spring’s improvement in the economy, and 642,000 of them started trying again, according to the Economic Policy Institute.
Because of that, the labor participation rate (those with jobs or looking for one) rose from 63.6 percent in April to 63.8 percent in May. In December of 2007, before the bottom fell out, the rate was 66 percent.
The EPI also notes that, if the participation rate increased to 65.3 percent (about two-thirds of the way between the May figure and 66 percent), there would be 3.6 million more people looking for jobs, bumping the jobless rate to 10.3 percent.
So, lots more people are feeling confident about getting a job—Oh, that’s good—but it could cause double-digit unemployment. No, that’s bad.
We’re working shorter weeks. The length of the average workweek fell a tenth of an hour in May, to 34.4 hours. Six minutes might not seem like much, but it costs the 150 million or so workers in the U.S., earning an average of $23 an hour, about $350 million a week.
Oh, that’s bad.
No, that’s good, because we’re almost at the pre-recession level of 34.6 hours.
On the national, state and local level, job cuts have helped slash budget deficits.
Oh, that’s good.
No, that’s bad. A lot of May’s relapse falls on the public sector. Legislators at every level scream for leaner, meaner government, and the end result is a loss of 13,000 public sector jobs in May. The sector has lost more than 600,000 jobs over the past three years.
We had a warm March.
Oh, that’s good.
No, that’s bad. The phrase of the day is “negative weather payback.” That’s what happens when a warm early spring draws people outside to spend and build houses, making the numbers for May look worse in comparison.
One clear message in the latest jobs statistics involves education. In May, the jobless rate for those 25 and older with only a high school degree was 8.1 percent. For those with a college degree or more, it was 3.9 percent.
If you’re under 25 and not in school, the rate was a Spain-like 21 percent vs. 8.5 percent for those with college degrees. Like James Brown said, without an education, you might as well be dead.
Much has been written about Solyndra, the solar panel energy company whose bankruptcy made the Obama administration vulnerable to charges of ineptitude and cronyism.
As is often the case, the truth isn’t as cut-and-dried as some might think. Money.cnn.com, the website run by CNN, Fortune and Money, pointed out these facts recently:
The loan that funded Solyndra was started by the Bush administration in 2005. (But the Bush administration never approved Solyndra’s loan.)
Solyndra is one of only two companies (out of 33) to have declared bankruptcy under the innovative energy loan program so far. Congress expected more and set aside $10 billion to cover losses. Solyndra’s tab is $529 million, a little more than 5 percent of the money set aside.
Solyndra was denied another loan for $468 million by the Obama administration.
Despite Republican presidential candidate Mitt Romney’s claim that the White House “had steered money to friends and family,” no evidence of this exists after an official, independent report.
Solyndra’s failure was caused not so much by ineptitude as by the rapidly falling price of flat solar panels and silicon, mostly from China.
Business Editor Howard Owen writes this biweeklycolumn on business and the economy. He can be reached at 540/374-5539 or howen@freelance star.com.