Saturday, April 2, 2016

Today's links

1--Investors Should Pay Attention to What Companies Ask Them to Ignore  

Some of the charges companies have been excluding from pro forma results are worth ignoring, but the data suggest a great many of them aren’t

. In the fourth quarter, pro forma earnings for companies in the S&P 500 were 59% above GAAP, according to figures from FactSet and S&P Dow Jones Indices.

2--The jobs report; Just the facts

The household survey is a phone survey conducted by the BLS. It measures unemployment and many other factors.

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.

In the household survey, if you work as little as 1 hour a week, even selling trinkets on EBay, you are considered employed.

The official unemployment rate is 5.0%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 9.8%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

3--Obanma: "“America is pretty darn great right now.”  The social crisis and the US elections

Only 11.7 percent of the new jobs created in February were full-time. This on top of the fact that the vast majority of the new jobs were low-wage service-sector positions, many of them temporary. Employment in manufacturing and mining continued to fall....

Labor Secretary Thomas E. Perez boasted, “The remarkable US recovery continues… The wind is once again at our back.” Jason Furman, chairman of Obama’s Council of Economic Advisors, declared, “The private sector has now added 14.4 million jobs over 73 straight months of job growth, the longest streak on record.”

But what kind of jobs? A new report released this week demonstrates that under first the Bush and then the Obama administrations, the whole structure of employment in America has been radically altered to reduce the status of workers to that of a super-exploited casual and contingent labor force, lacking any job security or health and retirement benefits.

The report, by Princeton University and the RAND Corporation, documents the fact that all net full-time job growth in the US between 2005 and 2015 was accounted for by “alternative work arrangements,” i.e., people working as independent contractors, temps, through contract firms or on-call. There were actually fewer conventional full-time positions—by 400,000—in 2015 than a decade earlier.

One particularly revealing indication of the brutal conditions facing growing sections of workers is the fact that the proportion of contingent workers holding multiple jobs has more than quadrupled over the past 10 years, from 7.3 percent in 2005 to 32 percent in 2015. Nearly one-third of people working with no benefits or job security are holding down an additional part-time or full-time job just to make ends meet.

Another report released this week, this one by the Pew Charitable Trusts, provides further insight into the conditions facing low-income workers that are fueling anti-establishment and anti-capitalist sentiment. Entitled “Household Expenditures and Income,” the study reports that housing costs for the lower third of income groups in the US rose 33 percent between 2013 and 2014, the biggest annual jump in housing spending for the 19 years that Pew has studied the question....

With spending on transportation and food also rising, 2014 became the first year studied by Pew in which median spending on these basic necessities surpassed median income. By 2014, median income had fallen by 13 percent from 2004 levels, while expenditures had increased by 14 percent....

Obama, whose policies have accelerated the process by which the share of national income going to the top 1 percent has nearly tripled, increasing from about 8 percent in the 1960s and 1970s to more than 20 percent today....

The many more workers moving to support Sanders are looking for a genuinely radical and socialist alternative to capitalism. They will not find it in the Vermont senator, whose campaign is not an expression of working class militancy and radicalization, but rather the response of sections of the ruling class to the danger posed by this development. His conscious aim is to preempt the emergence of an independent political movement of workers and youth and suffocate social opposition by channeling it back behind the Democratic Party.

4--Temps and contractors accounted for all US job growth since 2005

Source: Authors calculations based on Bureau of Labor Statistics CWS 1995 and 2005 and Rand-Princeton CWS 2015.

5--Profit Margins Going Down For The Count

6--Charts: What's the real unemployment rate?

7--Temp workers: Helping or hurting Japan’s future

Fewer than 10% of Japanese companies retain lifetime employment now, according to Diamond business magazine. Reforms introduced by former Prime Minister Junichiro Koizumi a decade ago liberalised the labour market, accelerating the growth of part-time and casual work. Current Prime Minister Shinzo Abe continues supporting that trend.

Since Abe took office in December 2012, the number of irregular workers — often earning less than half the pay of their full-time counterparts with permanent employment contracts — has jumped by over 1.5 million people, according to statistics by the Ministry of Health, Labour and Welfare. Casual and part-time employees number nearly 20 million, almost 40% of the current Japanese workforce. ...

The driving forces of workforce casualisation are complex. Rather than being saddled with the costs of keeping workers on payroll for life, corporations are demanding more flexible employment arrangements...

Last year, the Japanese government recorded 16% in relative poverty rates — defined as the share of the population living on less than half the national median income. That is the highest on record. Poverty levels have been growing at a rate of 1.3% a year since the mid-1980s. Along the same definition, a study by the OECD in 2011 ranked Japan sixth from the bottom among its 34 mostly rich members.

Casualisation is contributing to a less egalitarian society, concludes Kaori Katada, a sociologist at Hosei University. At the moment, millions of young casual workers still live at home, rent-free, with mum and dad, whose generation drove Japan’s post-war boom. Once that generation passes, she adds, underlying poverty will become more evident.

8--The trend for part-time work sweeping the world: Part-time work dominating jobs in the United States, Canada, and Japan.

9--Stagnation By Design

Median real income in the US is below its level in 1989, a quarter-century ago; median income for full-time male workers is lower now than it was more than 40 years ago.


Some, like the economist Robert Gordon, have suggested that we should adjust to a new reality in which long-term productivity growth will be significantly below what it has been over the past century. Given economists’ miserable record – reflected in the run-up to the crisis – for even three-year predictions, no one should have much confidence in a crystal ball that forecasts decades into the future. But this much seems clear: unless government policies change, we are in for a long period of disappointment.


Markets are not self-correcting. The underlying fundamental problems that I outlined earlier could get worse – and many are. Inequality leads to weak demand; widening inequality weakens demand even more; and, in most countries, including the US, the crisis has only worsened inequality.

10--Joseph E. Stiglitz’s new book, “The Price of Inequality,” is the single most comprehensive counter­argument to both Democratic neoliberalism and Republican laissez-faire theories...

It is not uncontrollable technological and social change that has produced a two-tier society, Stiglitz argues, but the exercise of political power by moneyed interests over legislative and regulatory processes. “While there may be underlying economic forces at play,” he writes, “politics have shaped the market, and shaped it in ways that advantage the top at the expense of the rest.” But politics, he insists, is subject to change....

Stiglitz describes the economic capture of regulatory authorities by the interests under their jurisdiction — and the more subtle intellectual capture of policy makers of all kinds...It is not just democratic politics that is threatened by huge disparities in wealth and income. Much of Stiglitz’s book is devoted to demonstrating that excessive inequality amounts to sand in the gears of capitalism, creating volatility, fueling crises, undermining productivity and retarding growth. .

(Google: Part time labor in Japan )

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