Summer jobs program, payroll tax cut could put many back to work
As the recession looms and families figure out how to pay the bills and keep their homes, no other segment of society has been hit harder than Black people. For more than 1.4 million African Americans, weeks have turned into months, and months into years.
It’s no secret, throughout President Barack Obama’s term in office, he has been criticized incessantly by pundits and those within the Congressional Black Caucus, who feel that he has not done enough to help African Americans in general.
So when he went before Congress last week with his $450 billion jobs bill, many wondered how this bill — providing it passes the GOP-controlled House intact — would significantly help people of color, particularly African Americans.
“It will be an extraordinary benefit to well over a million and half African American people…who are unemployed, because of the way the program is structured,” said U.S. Rep. Chaka Fatah, a Democrat who represents Pennsylvania’s second congressional district. “It will provide benefits to the long-term unemployed. There is a tax benefit to a company that hires someone who has been unemployed for more than six months. The bill also focuses on veterans and there are parts of the program that will help young people who are out of work as well.”
Here are some reasons why the president’s new Jobs Bill can help African Americans:
• The extension of unemployment insurance will benefit 1.4 million African- Americans and their families. At the same time, the president is proposing bipartisan reforms that will enable that — as these families continue to receive benefits — the program is better tailored to support re-employment for the long-term unemployed.
• Targeted support for the long-term unemployed could help the 1.4 million African-Americans who have been looking for work for more than six months: To help them in their search for work, the president is calling for a new tax credit for hiring the long- term unemployed.
• A commitment to rebuilding and revitalizing communities across the country will target investments to the communities hardest-hit by the recession. The president’s investments in infrastructure include a school construction initiative with a significant commitment to the largest urban school districts, an investment in revitalizing communities that have been devastated by foreclosures, and a new initiative to expand infrastructure employment opportunities for minorities, women, and socially and economically disadvantaged individuals.
• Support for subsidized jobs and summer/year-round jobs for African-American youth — for whom unemployment is above 30 percent. In an environment with an unemployment rate of 32.4 percent for African-American youths, the president is proposing to build on successful programs like the TANF Emergency Contingency Fund to create jobs and provide training for those hardest-hit by the recession.
• An extension and expansion of the payroll tax cut for nearly 20 million African-American workers. By extending the payroll tax cut for employees next year and expanding it to cut payroll taxes in half, the president’s plan will help increase the paychecks of nearly 20 million African-American workers.
The early response to the bill has been favorable amongst Blacks, who had grown weary with the president throughout the years. Many felt he was indifferent to their needs.
Many hope the president’s Jobs Bill will translate into reduced misery for them over the coming months. While the country's unemployment rate stands at 9.1 percent, Black unemployment has hit 16.7 percent, the highest since 1984. Unemployment among male blacks is at 18 percent, and black teens are unemployed at a rate of 46.5 percent.
“Particularly in the African-American community, which often times has been expected to flourish and thrive without any investment at all and have done so in spite of a lack of resources, I think this (jobs bill) will be something that will be welcomed in our community and will be significant,” said Cindy Bass, the nominee for City Council for the Eight District. “I think it will be beneficial when it comes to employment readiness and opening up job opportunities for people of color. More than we have seen in quit sometime."
Prominent African-Americans like Kenneth Chenault, chairman and CEO of American Express and Mayor Michael Nutter, quickly applauded the plan. U.S. Rep. Maxine Waters, D-Calif., who has been one of the most vocal advocates for dealing more effectively with Black unemployment, was enthusiastic.
For the president, it was a welcome change in tone after a steady drumbeat of criticism from members of the Congressional Black Caucus, who held their own job fairs and town hall meetings while protesting that Obama's jobs tour across America last month bypassed black communities.
The caucus' urban blitz cleared a path for the country's first Black president to act, Waters said.
"I can see that our handprint is all over it," Waters said of Obama's plan. "We upped the ante a little bit by pushing, being a bit more vocal. This was not done in a way to threaten the president but to make it easier for him. We think we helped him to be able to formulate a response."
The jobs plan was praised by Ralph Everett, president and chief executive of the Joint Center for Political and Economic Studies, a nonpartisan black think tank.
Although the president did not specifically mention high unemployment among blacks, black people "are sophisticated enough to understand" how their communities will benefit, U.S. Trade Representative Ron Kirk said Friday.
"Obviously there is a debate raging, saying that we should come out and say this expressly for the Black and Latino community," Kirk said. "But this president got elected spectacularly on his premise that we are not a black America, a brown America, a white America. We are one America."
The White House moved quickly to capitalize politically on the good will, emailing an extraordinary blast of supportive statements from elected officials, union leaders and interest groups within minutes after Obama spoke Thursday night.
On Friday, while the president pushed his American Jobs Act in Richmond, Va., his aides promoted targeted relief to Hispanics, teachers, police officers, construction workers, small businesses and others.
Administration officials said the plan would extend unemployment benefits and provide support for 1.4 million blacks who have been unemployed six months or longer. It also would provide summer and subsidized jobs for youth; help boost the paychecks of 20 million black workers through an extension and expansion of the payroll tax, and benefit, in some way, more than 100,000 black-owned small businesses.
"With over 16 percent of African-Americans out of work and over 1 million African-Americans out of work over six months, I think the president believes this is a serious problem and the onus is on us to do everything we can to tackle this," Danielle Gray, deputy director of the National Economic Council, told reporters.
White House adviser Valerie Jarrett promoted Obama's plan on Steve Harvey's syndicated morning radio show, saying it would help "every part of our country, but particularly those who are the most vulnerable, who have been struggling the hardest, who have been trying to make ends meet and all they need is a little help from their government."
A factor in the early enthusiasm in Obama's plan with blacks is that most accept that, as the country's first black president, there are limits to what he can do about their specific problems — especially as he heads into the 2012 campaign.
“Obviously the president cares about the African American community as he does all Americans,” said Fattah. “This bill will benefit the African American community and the broader community as whole, because the minute someone goes to work, they start spending money. And that’s what stimulates the economy. It will have significant benefits in cities like Philadelphia, Detroit, Cincinnati, Chicago and the likes. I think what the president has done is structure a program that deals with the hardest hit communities.”
The Associated Press contributed to this report.
WASHINGTON — The economy is ending 2011 on a roll.
The job market is healthier. Americans are spending lustily on holiday gifts. A long-awaited turnaround for the depressed housing industry may be under way. Gas is cheaper. Factories are busier. Stocks are higher.
Not bad for an economy faced with a debt crisis in Europe and, as recently as this summer, scattered predictions of a second recession at home. Instead, the economy has grown faster each quarter this year, and the last three months should be the best.
"Things are looking up," says Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi UFJ.
When The Associated Press surveyed 43 economists in August, they pegged the likelihood of another recession at roughly one in four. The Dow Jones industrial average was lurching up or down by 400 points or more some days.
There was plenty of reason for gloom. A political standoff over the federal borrowing limit brought the United States to the brink of default and cost the nation its top-drawer credit rating.
Most analysts now rule out another recession. They think the economy will grow at an annual rate of more than 3 percent from October through December, the fastest pace since a 3.8 percent performance the spring of 2010.
Many economists still worry that the year-end surge isn't sustainable, in part because the average worker's pay is barely rising. And Europe may already be sliding into a recession that will infect the United States.
The outlook could darken further if Congress can't break the impasse blocking an extension of a Social Security tax cut for 160 million Americans and emergency unemployment benefits.
Yet for now, the economy is on an upswing that few had predicted:
— JOBS: The number of people applying for unemployment benefits came in at 366,000 last week, down from a peak of 659,000 in March 2009. Even in good economic times, the figure would be between 280,000 and 350,000.
Employers have added at least 100,000 jobs five months in a row, the longest streak since 2006. And the unemployment rate fell from 9 percent in October to 8.6 percent last month, the lowest since March 2009.
Small businesses are hiring again, too, according to the National Federation of Independent Business.
Business is up at AG Salesworks in Norwood, Mass., which helps technology companies like Motorola find new customers. The firm has hired 26 workers to restore its staff to 56, erasing the job cuts from the recession. CEO Paul Alves plans to add an employee or two a month as long as growth continues.
"I do see more confidence than I saw 12 months ago," Alves says. "But it's good, not great. Robust isn't the word I'd use."
— SPENDING: The holiday shopping season has turned out better than anyone expected. Sales from November through Saturday were up 2.5 percent. Americans have spent $32 billion online, 15 percent more than a year ago. Retails sales were up in November for the sixth month in a row. People are spending, in particular, on clothes, cars, electronics and furniture.
— CONSUMER CONFIDENCE: Americans felt better about the economy in November than they had since July, according to the Conference Board, a business group that tracks the mood of consumers.
The board's consumer confidence index climbed 15 points to 56 in November, the biggest one-month jump since April 2003. During the Great Recession, the index fell as low as 25.
"It seems like the confidence of the traditional American consumer is higher right now," says Jim Newman, executive vice president of operations at the digital marketing company Acquity Group, which has added 100 jobs since summer.
— GAS: Falling prices at the pump have freed more money for consumers to spend on appliances, furniture, vacations and other things that help drive the economy. The national average for regular unleaded has sunk to $3.21 a gallon since peaking at $3.98 in May, according to the AAA Daily Fuel Gauge.
— INVENTORIES: Businesses are restocking shelves and warehouses, more confident that customers will buy their products. In October, their inventories were up 8.7 percent from a year earlier. An increase in inventories is expected to account for perhaps a third of growth this quarter.
The battered housing market might be showing signs of recovery. Home construction rose more than 9 percent in November from October, driven by apartment building. And the National Association of Realtors said Wednesday that sales of previously occupied homes rose 4 percent in November.
But housing is climbing out of a deep hole: The existing homes sold at an annual rate of 4.4 million — well below the 6 million that would signal a healthy housing market. And the real-estate agents' trade group revealed Wednesday that it overstated sales by 3.5 million during and after the Great Recession.
Once they peer into 2012, economists turn cautious. Bernard Baumohl, chief economist with the Economic Outlook Group, says that stronger consumer spending "is absolutely unsustainable. .... Wages have not kept pace with inflation all year."
The government says that once you adjust for inflation, weekly earnings dropped 1.8 percent from November 2010 to last month. Consumers have used savings or credit cards to finance their purchases. Once bills come due in early 2012, Baumohl foresees a cutback in spending.
Baumohl is so pessimistic that he expects the economy to shrink at a 0.2 percent annual rate in the first three months of 2012 and to end the year with no more than 1.8 percent growth.
Europe is almost sure to slide into recession, even if its policymakers find a solution to the continent's debt crisis. In the worst case, a chaotic breakup of the euro currency could ignite a worldwide financial panic.
Joe Echevarria, CEO of the accounting and consulting firm Deloitte LLP, says his company's clients are delaying hiring or expansion decisions to see if Europe's crisis will be resolved.
Another worry — again — is Washington. President Barack Obama and Republicans in Congress still had not broken their impasse Wednesday on how to extend a Social Security tax cut. Without an extension, taxes will go up $1,000 in 2012 for someone making $50,000.
Failing to extend the tax cut, combined with the end of long-term unemployment benefits and other federal budget cuts, could shave 1.7 percent points from growth in 2012, warns Mark Zandi, chief economist at Moody's Analytics.
Forecasters are also chastened by the past two years. Since the Great Recession officially ended in June 2009, the economy has stalled twice just when it appeared to be gaining momentum.
In mid-2010, businesses slowed spending sharply. This year, the damage came from protests in the Middle East that drove oil prices higher, the earthquake in Japan, budget cuts by state and local governments and the stalemate in Washington.
But Joel Naroff of Naroff Economic Advisors says he thinks the fears about next year are overblown and the economy will grow 3 percent in 2012. Next year will be all about jobs. If job growth keeps accelerating, the economy is much more likely to meet Naroff's predictions than the pessimists'.
In addition, Naroff says, that's because consumers and businesses have grown more confident. If Europe averts disaster — a crackup of the eurozone — and endures only a mild recession, as Naroff expects, the impact on the United States will be minimal, he says.
"If you stopped the average person on the street and asked, 'Are you slowing your spending because of what's happening in Europe?' they'd ask, 'What planet are you from?'" -- (AP)
NEW YORK — Bank of America will cut about 30,000 jobs over the next few years in a bid to save $5 billion per year. The cost-cutting drive is part of a broader effort to reshape and shrink the nation's largest bank as it copes with fallout from the housing bust.
The bank announced the job cuts in a statement shortly after Brian Moynihan, the bank's CEO, disclosed the cost-saving goals in an address to investors in New York. "We're a much simpler company than we were 24 months ago," Moynihan said.
Bank of America stock was up 2 cents at $7 at midday. The stock has lost half its value this year, largely over problems related to poorly-written mortgages it acquired with its 2008 purchase of Countrywide Financial Corp. The bank faces lawsuits from investors and regulators over the sales of mortgage-backed securities that lost value after the housing boom collapsed.
The job cuts follow a revamp of the bank's top management team last week. Two senior executives, wealth management head Sallie Krawcheck and head of consumer banking Joe Price, left the bank. The bank also elevated commercial banking chief David Darnell and investment banking head Tom Montag to co-chief operating officers, reporting to Moynihan.
The latest job cuts will lead to a 10 percent reduction in the bank's work force of 288,000. The cuts come on top of 6,000 positions the bank has already eliminated through the third quarter of this year.
The Charlotte, N.C. company said it expects many of the cuts to come through attrition and eliminating unfilled positions. The bank says the number of job cuts isn't fixed, but that it expects they will total 30,000. It hopes to save $5 billion in annual costs through 2014 under a cost-cutting plan dubbed internally as "Project New BAC." -- (AP)
WASHINGTON — The U.S. economy is steadily adding jobs — just not at a consistently strong pace.
July's modest gain of 162,000 jobs was the smallest since March. And most of the job growth came in lower-paying industries or part-time work.
The unemployment rate fell from 7.6 percent to a 4½-year low of 7.4 percent, still well above the 5 percent to 6 percent typical of a healthy economy. The rate fell because more Americans said they were working, though some people stopped looking for a job and were no longer counted as unemployed.
All told, Friday's report from the Labor Department pointed to a less-than-robust job market. It suggested that the economy's subpar growth and modest consumer spending are making many businesses cautious about hiring.
The report is bound to be a key factor in the Federal Reserve's decision on whether to slow its bond purchases in September, as many economists have predicted it will do. Some think July's weaker hiring could make the Fed hold off on any pullback in its bond buying, which has helped keep long-term borrowing costs down.
Friday's report said employers added a combined 26,000 fewer jobs in May and June than the government had previously estimated. Americans also worked fewer hours in July, and their average pay dipped.
For the year, job growth has remained steady. The economy has added an average of 200,000 jobs a month since January, though the pace has slowed in the past three months to 175,000.
Nariman Behravesh, chief economist at IHS Global Insight, called the employment report "slightly negative," in part because job growth for May and June was revised down.
Scott Anderson, chief economist at Bank of the West, said it showed "a mixed labor market picture of continued improvement but at a still frustratingly slow pace."
The reaction from investors was muted. Stock averages closed with modest gains. The yield on the 10-year Treasury note fell to 2.6 percent from 2.71 percent — a sign that investors think the economy remains sluggish and might need continued help from the Fed.
Beth Ann Bovino, senior economist at Standard & Poor's, said she thinks the Fed will delay any slowdown in its $85 billion a month in bond purchases.
"September seems very unlikely now," she says. "I'm wondering if December is still in the cards."
Still, it's possible that the lower unemployment rate, along with the hiring gains over the past year, could convince the Fed that the job market is strengthening consistently. Job growth has topped 140,000 each month for nearly a year, and unemployment has steadily declined.
"While July itself was a bit disappointing, the Fed will be looking at the cumulative improvement," said Paul Ashworth, chief U.S. economist at Capital Economics. "On that score, the unemployment rate has fallen from 8.1 percent last August to 7.4 percent this July, which is a significant improvement."
The government uses a survey of mostly large businesses and government agencies to determine how many jobs are added or lost each month. That's the survey that produced the gain of 162,000 jobs for July.
It uses a separate survey of households to calculate the unemployment rate. That survey captures hiring by companies of all sizes, including small businesses, new companies, farm workers and the self-employed.
The household survey found that 227,000 more people said they were employed last month. And 37,000 people stopped looking for work and were no longer counted as unemployed.
The number of self-employed jumped 241,000, or 2.6 percent, to 9.7 million — the most in eight months. This group includes freelance workers, construction contractors, lawyers and other professionals with solo practices and farmers and ranchers.
Combined, those factors explain why the unemployment rate declined from 7.6 percent to 7.4 percent.
More than half of July's job gain in the survey of big companies and government agencies came from lower-paying industries, extending a trend that's limiting Americans' incomes and possibly slowing consumer spending. Retailers, for example, added nearly 47,000 jobs — the biggest gain for any industry last month. Restaurants and bars added 38,400.
One Atlanta-based retailer, Cellairis, which sells mobile phone accessories, says it hired about 75 employees last month to meet growing demand. The company has 650 U.S. outlets, most of them mall kiosks. It plans to add 45 walk-in stores this year.
"People are willing to spend more now to protect and personalize their devices," said CEO Taki Skouras.
By contrast, employers in higher-paying industries, like Stripmatic, a steel parts maker in Cleveland, remain wary. Stripmatic hasn't hired anyone since adding five workers in the first three months of the year. Revenue has fallen 10 percent below projections this year.
The company's exports have picked up a bit in Mexico and Brazil but remain flat in Asia. Company President Bill Adler says he's concerned that slower growth in China could hamper his overseas sales.
Low-paying industries have accounted for 61 percent of jobs added this year, even though they represent only 39 percent of U.S. jobs overall, according to government data analyzed by Moody's Analytics. Mid-paying industries have accounted for fewer than 22 percent of the jobs added.
Some job gains were made in higher-paying fields last month. Financial services, which include banking, real estate and insurance, added 15,000 positions. Information technology added 4,300 and accounting 2,500. And manufacturing added 6,000 jobs, though that figure was offset by an equivalent loss in construction.
One growing source of better-paying jobs is local governments. They've now added jobs for five straight months and have helped offset job cuts by state and federal governments.
The result is that governments overall are much less of a drag on hiring than in the first three years of the economic recovery, which began in the summer of 2009. All told, they've shed 39,000 jobs in the 12 months that ended in July. That's down from a loss of 137,000 in the 12 months that ended in July 2012.
Most of the hiring by local governments has been for teachers and other jobs related to education. Local property tax revenue, a key source of funding for localities, fell after the recession but has begun to recover in some communities. Nationwide, home prices have risen, a trend that typically leads to higher property tax revenue.
More broadly, many of the jobs added in July were only part time. The number of Americans who said they were working part time but would prefer full-time work stands at 8.2 million — the highest since last fall. Part-time jobs accounted for 65 percent of the jobs added in July and 77 percent of those added this year.
The government defines part-time work as being fewer than 35 hours a week.
The percentage of adult Americans either working or actively seeking work dipped in July to 63.4 percent. This is called the "labor force participation rate." The participation rate has been generally declining since peaking at 67.3 percent in 2000. That's partly the result of baby boomers retiring and leaving the workforce.
Job gains are being slowed by the economy's tepid growth. It grew at an annual rate of just 1.7 percent in the April-June quarter, the government said this week. That was an improvement over the previous two quarters, but it's still far too weak to rapidly lower unemployment.
Recent data suggest that the economy could strengthen in the second half of the year. -- (AP)
WASHINGTON — President Barack Obama bluntly challenged Congress Monday to act immediately on his new jobs plan, brandishing a copy of the legislation in the Rose Garden and demanding: "No games, no politics, no delays."
Surrounded by police officers, firefighters, teachers, construction workers and others he said would be helped by the $447 billion package, the president said the only thing that would block its passage would be lawmakers deciding it wasn't good politics to work with him. "We can't afford these same political games, not now," Obama said.
The president said he was sending the package to Congress later Monday, after unveiling it last week in a speech to a joint session of Congress. Then he's heading out to try to sell it to the public, on Tuesday in Ohio — home state of House Speaker John Boehner — and Wednesday in North Carolina.
At the same time, the Democratic National Committee is backing up the effort with a new ad campaign in politically key states from Nevada to New Hampshire.
The centerpiece of the plan cuts payroll taxes that pay for Social Security, giving a tax break to workers and businesses. There's also new spending for teachers and school construction, and an extension of jobless benefits, among other elements. Republican lawmakers who control the House have promised quick review of the legislation and seem open to the tax-cutting elements, but some have already rejected new spending.
Boehner had a measured response to Obama's comments Monday, pledging to review it carefully.
"The record of the economic proposals enacted during the last Congress necessitates careful examination of the president's latest plan as well as consideration of alternative measures that may more effectively support private-sector job creation," the speaker said in a statement. "It is my hope that we will be able to work together to put in place the best ideas of both parties and help put Americans back to work."
The White House detailed the specifics Monday on how the legislation would be paid for. It would rely on a series of tax hikes that have all previously been proposed by the White House and rejected by Republicans. They are:
—$400 billion from limiting the itemized deductions for charitable contributions and other deductions that can be taken by individuals making over $200,000 a year and families making over $250,000;
—$40 billion from closing loopholes for oil and gas companies;
—$18 billion from requiring fund managers to pay higher taxes on certain income;
—$3 billion from changing the tax treatment of corporate jets.
White House budget director Jacob Lew said that Obama will also include those tax proposals in a broader debt-cutting package he plans to submit to a congressional supercommittee charged with finding $1.2 trillion in savings later this year. He said that the supercommittee would have the option of accepting the payment mechanisms for the jobs bill proposed by Obama, or proposing new ones.
In his Rose Garden comments, Obama adopted a newly sharp tone that has pleased dispirited Democrats, deriding Republican opposition at a time when the economy has stalled and unemployment stands at 9.1 percent.
"Instead of just talking about America's jobs creators, let's actually do something for America's jobs creators," Obama said. "We can do that by passing this bill."
But despite his suggestion that the GOP is playing politics, Obama himself has a huge political stake in success of the legislation. The 2012 presidential campaign is ramping up with Republican hopefuls attacking Obama at every turn over his stewardship of the economy, and polls showing deep public unhappiness with his economic leadership.
The new DNC ad campaign was to air beginning Monday in eight swing and early voting states, urging viewers to "Read it. Fight for it. ... Pass the President's Jobs Plan." -- (AP)
WASHINGTON — The unemployment rate, which has refused to budge from the 9 percent neighborhood for two and a half frustrating years, fell sharply in November, driven in part by small businesses that finally see reason to hope and hire.
Economists say there is a long way to go, but they liked what they saw.
The rate fell to 8.6 percent, the lowest since March 2009, two months after President Barack Obama took office. Unemployment passed 9 percent that spring and had stayed there or higher for all but two months since then.
The country added 120,000 jobs in November, the Labor Department said Friday. Private employers added 140,000 jobs, while governments cut 20,000.
The economy has generated 100,000 or more jobs five months in a row — the first time that has happened since April 2006, well before the Great Recession.
"Something good is stirring in the U.S. economy," Ian Shepherdson, an economist at High Frequency Economics, said in a note to clients.
The stock market rallied at the opening bell, after the report came out, but finished flat for the day. It was still up 787 points for the week. The only bigger point gain in a week was in October 2008, when stocks lurched higher and lower during the financial crisis.
The report showed that September and October were stronger months for the job market than first estimated. For four months in a row, the government has revised job growth figures higher for previous months.
September was revised up by 52,000 jobs, for a gain of 210,000. October was revised up by 20,000, for a gain of 100,000.
Unemployment peaked at 10.1 percent in October 2009, four months after the Great Recession ended. It dipped to 8.9 percent last February and 8.8 percent last March but otherwise was at or above 9 percent.
The rate fell not just because people found jobs. About 300,000 people simply gave up looking for work, and were no longer counted as unemployed. People routinely enter and leave the work force, though 300,000 is more than usual.
Obama, who faces a re-election vote in less than a year and a presidential campaign that will turn on the economy, seized on the decline to argue for expanding a cut in the tax that workers pay toward Social Security.
The tax cut affects 160 million Americans. It lowers a worker's Social Security tax by up to $2,136 a year. Someone earning $50,000 a year saves $1,000 with the tax cut. It will expire Dec. 31 unless Congress acts.
Republicans and Democrats have supported an extension but differ on how to pay for it. The Senate on Thursday defeated plans from both parties. Republicans had proposed paying for the cut by freezing the pay of federal workers through 2015. Democrats wanted to raise taxes on people making $1 million or more a year.
"Now is not the time to slam the brakes on the recovery. Right now it's time to step on the gas," Obama said Friday.
Inside the unemployment report, one of the most closely watched indicators of the economy's health, were signs of improvement for small businesses, which employ 500 or fewer people and account for half the jobs in the private sector.
The government uses a survey of mostly large companies and government agencies to determine how many jobs were added or lost each month. It uses a separate survey of households to determine the unemployment rate.
The household survey picks up hiring by companies of all sizes, including small businesses and companies just getting off the ground. It also includes farm workers and the self-employed, who aren't included in the survey of companies.
The household survey has shown an average of 321,000 jobs created per month since July, compared with an average of 13,000 the first seven months of the year.
When the economy is either improving or slipping into recession, many economists say, the household survey does the better job of picking up the shift because it detects small business hiring.
"We might finally be seeing new business creation expand again, which is critical to the sustainability of the recovery," said Diane Swonk, chief economist at Mesirow Financial, a financial services company.
The National Federation of Independent Business, a small business group, said Friday that its own survey of small companies in November found that more of them are planning to add workers than at any time since September 2008, when the financial crisis struck.
LogicBoost, a Washington, D.C., software consulting firm with 19 employees, has hired a sales worker and a marketing worker in the past three months and planned to post an opening for a software engineer Friday.
"Business is going gangbusters," CEO Jonathan Cogley said. "It would be great if the economy were stronger. I think we'd be growing even faster."
Outside Detroit, Grace Dersa opened the Frank Street Bakery this week with her husband. They took the $60,000 gamble after seeing signs that the local economy is improving. They, too, plan to add a worker soon.
"When we go to a restaurant here, there's a 30-minute to two-hour wait. Homes are selling in this area," Dersa said. "People are spending."
Indeed, Americans dropped a record $52.4 billion over the Thanksgiving weekend, according to the National Retail Federation, a trade group. A separate report from MasterCard found spending was up almost 9 percent from last year.
The unemployment report was the latest encouraging indicator for the economy. Other reports this week have shown that factories are producing more, construction is growing, and people are buying more cars.
The accelerating debt crisis in Europe has loomed over the economy for months. An economic collapse there would hammer sales of American exports. And if the crisis caused banks to stop lending money, the world economy would suffer.
But there are signs that Europe is moving toward a solution. Earlier this week, six central banks around the world made it easier for commercial banks overseas to borrow American dollars to do business. The coordinated action calmed financial markets and bought time for politicians to work something out.
The leaders of Germany and France appear to be pushing for stronger rules to make sure European governments are responsible with their budgets, the first step in a strategy to save the euro currency from collapse.
European leaders meet next Friday for a crucial summit on the matter.
In the United States, about 13.3 million people are counted as unemployed.
More than half the jobs added last month were by retailers, restaurants and bars. But professional and business services rose by 33,000, and those tend to be higher-paying jobs, such as engineers and accountants. The category also includes temporary jobs, which increased.
The household survey found that the number of unemployed fell by nearly 600,000 last month. About half found jobs, while the other half stopped looking for work. The decline of 600,000 is the biggest since January.
The so-called underemployment rate fell to 15.6 percent from 16.2 percent. That includes three groups: people who are unemployed and looking for work, people who are unemployed and have stopped looking, and people who are working part-time but would rather be working full-time.
But even with the recent gains, the economy isn't close to replacing the jobs lost in the recession. Employers began shedding workers in February 2008 and cut nearly 8.7 million jobs over the next 25 months. The economy has regained about 2.5 million.
And many people aren't getting raises. Average hourly pay slipped 2 cents last month to $23.18. In the past year, wages have risen 1.8 percent, but inflation has risen twice as fast, eroding buying power.
Obama may face voters next fall with the highest unemployment of a sitting president seeking election since World War II. Gerald Ford faced 7.8 percent unemployment when he lost to Jimmy Carter in 1976. Ronald Reagan faced 7.2 percent unemployment in 1984 and trounced Walter Mondale. Unemployment was 7.8 percent when Obama took office in January 2009.
The economy grew at a 2 percent annual rate in July, August and September. Paul Ashworth, an economist at Capital Economics, estimates growth will speed up to 2.5 percent in the last three months of the year, but slow to 1.5 percent in 2012. Ashworth's estimate assumes a recession in Europe, but not a nightmarish collapse of the euro. -- (AP)
WASHINGTON — The economy is picking up. If only job growth would follow.
A spate of data Thursday showed U.S. factories grew last month at the fastest pace since June, construction spending increased for a third straight month, and both retail sales and auto sales rose in November.
But the number of people applying for unemployment benefits is still too high to signal strong hiring.
The reports offered a mixed picture for the economy one day before the government reports on job growth in November. Economists project that employers added a net 125,000 jobs. That's not enough to lower the unemployment rate, which is projected to stay at 9 percent for the second straight month.
And manufacturers could face strains overseas in key export markets, especially if Europe's debt crisis worsens and leads the continent into another recession.
For now, factories are growing. The Institute for Supply Management, a trade group of purchasing managers, said Thursday that its manufacturing index rose to 52.7 in November, up from 50.8 in October. Any reading above 50 indicates expansion. Factories have grown for 28 straight months.
Bradley Holcomb, chair of the ISM's survey committee, said manufacturers "are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders."
Still, companies have tempered their outlook with concerns about future economic growth, government regulation and the debt crisis in Europe, he added.
New orders rose to a seven-month high and production increased, according to separate indexes in the report.
Ian Shepherdson, an economist at High Frequency Economics, said the gains suggest factory output will expand at an even faster pace next month.
"The economy seems finally to be developing real momentum; growth is accelerating," he said in a note to clients.
But a measure of factory employment fell. The drop indicates manufacturers are still hiring, but at a slower pace than the previous month.
"Manufacturers are trying to meet demand without significantly increasing their work force," said Ryan Wang, an economist at HSBC Securities.
Worker productivity rose in the July-September quarter by the most in 18 months, while labor costs fell, the government said Wednesday.
A more productive and less-costly work force can boost corporate profits. But unless companies see more demand, they're unlikely to step up hiring.
And manufacturers could soon see less demand overseas. Most economists expect Europe's financial crisis to tip that region into recession next year. About 20 percent of U.S. exports are shipped to Europe.
China, the world's second-largest economy, is also slowing. Manufacturing in China contracted in November for the first time in nearly three years, according to business surveys released Thursday.
Separately, the Labor Department said the number of people who applied for unemployment benefits last week rose above 400,000 for the first time in four weeks. The increase comes after applications had drifted lower over the past two months.
About 7 million people are still receiving benefits. House Republicans said they are drafting legislation to continue an extended benefits program set to expire at the end of this year. That program provides up to 99 weeks of aid in states with the highest unemployment rates.
Another report showed that U.S. builders spent more in October on new homes, offices and shopping centers. Construction spending rose for a third straight month, the Commerce Department said. Despite the gains, overall construction spending remained depressed.
The projected job growth in November would be an improvement from the previous month, when the economy added just 80,000 jobs.
Some economists are more optimistic after payroll provider ADP said Wednesday that companies added 206,000 workers last month, the most this year. That survey doesn't include government agencies, which have been cutting jobs.
Other economic indicators reinforce the outlook for an improving economy. Retailers reported a strong start to holiday sales over the Thanksgiving weekend, consumer confidence surged in November to the highest level since July, and Americans' pay rose in October by the most in seven months.
Those reports have caused many economists to forecast a pickup in growth in the final three months of the year, to about a 3 percent annual rate. That would be an improvement from growth of 2 percent in the July-September period. -- (AP)
WASHINGTON — Politics this past week was like a corny flashback replay of rapper knuckleheads boasting on about “East Coast vs. West Coast.” This week, however, was less about a Biggie/Tupac face-off than it was about competing visions on the roles of government.
Within the span of one week before the 10th anniversary of the 9/11 attacks, leaders on both sides of the partisan aisle were staking out their positions on exactly how much or how little government should interact with its citizens — from spending to the provision of services that have become as ubiquitous and all-American as the crack in the Liberty Bell.
On one side was the president, offering up a highly anticipated jobs speech that ended up being the political version of a Braveheart battle scene — Obama playing William Wallace, face plastered with the trademark blue paint of Scottish rebels on the ridge yelling charge. The result was, instead, an uncharacteristically animated moment for the typically professorial commander-in-chief. It became less about the American Jobs Act being introduced and more a philosophical rant on the significance of the government’s role in national progress.
“The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy,” was a seemingly revived president in jab mode that evening, showing an unusual eagerness to pick a fight with plucky Republicans who had been dismissing the speech before it was even delivered. It was sharp and punchy, starkly different from the subdued mood and head hanging that defined the White House through a heated debt-ceiling summer.
“In fact, this larger notion that the only thing we can do to restore prosperity is just dismantle government, refund everybody’s money, and let everyone write their own rules, and tell everyone they’re on their own — that’s not who we are. That’s not the story of America.”
In contrast, the Republican debate at the Reagan Library in Simi Valley, Calif., may not have disappointed the political junkies itching for a food fight on stage, but it certainly reconfirmed anxiety on the left over a crowded field of presidential aspirants bound by a common theme of diminished government. It was unnervingly surreal and contradictory: watching a crowded, almost rabid field of primary candidates slam government as if it was a disease, yet in a perpetual wrestling match for the biggest government gig of them all.
“It’s an interesting dynamic that you have, watching all these Republican candidates who are anti-government, yet running for the highest office in the land,” observes Jason Johnson, a political science professor at Hiram College and author of the recent “Political Consultants and Campaigns: One Day to Sell.” “It fascinates me that these guys say government doesn’t create jobs, private sector creates jobs. Yet, they keep bragging about the number of jobs they created when they were governors. That makes no sense.”
The strongest in the anti-government pack is Texas Gov. Rick Perry, outfitted with cheese grin cowboy swagger and boots. Perry has experienced a healthy surge ahead of Romney, suddenly capturing the crown of polling king only a few weeks since he announced his candidacy. For certain, it means that Perry is the primary flavor of the month — barring any unforeseen gaffe, scandal or hand caught in a money or sexual cookie jar. Still, Republicans have been here before — perpetually picking “rock stars” and party quarterbacks, all hyped as the “Next-Biggest-Thing” or the next reincarnation of Ronald Reagan. Sen. Fred Thompson and Mayor Rudy Giuliani in 2008 became celebrity crash-and-burns; so did Mississippi Gov. Haley Barbour earlier this year, pulling the plug on a candidacy that had little chance of getting jump-started.
But, Johnson takes exception to that when discussing Perry, calling him “somewhat of a phenomenon” as he personally watched the audience wooing for the longtime Texas politician.
“Perry is, by far, capturing the most passion of all GOP candidates, number one to only Ron Paul,” says Johnson, describing the scene at the Reagan Library.
Nor did Perry disappoint red meat conservative rank and file as he unleashed a furious string of volatile sound bites and catch phrases. At one point, he drew loud, mob-style applause from the audience during a particular high moment as he delivered a near perfect emotional performance on his views about the death penalty.
Media heads were hoping for the drama last night, particularly from Perry, whose own on-the-campaign-trail remarks have provided much ammunition for opposition hacks in the primary and the general looking for the perfect political ad. And he delivered. “Maybe it’s time to have some provocative language in this country,” was Perry at one point, as if there hadn’t been enough provocative language in the past few years of tea party revolutions, ugly midterms and unprecedented political snubbing.
But, questions mounted over Perry’s angle in calling Social Security “a ponzi scheme” and a “monstrous lie” without offering any attempt to suggest fixing it. What was the wisdom in calling climate change science “nonsense” and claiming astronomer “Galileo got outvoted for a spell?”
Going unapologetically scorched earth on topics such as Social Security is a curious move on the part of the Perry camp as it carries risk. Obviously, the GOP’s very reliable and very vote-happy base of senior voters won’t respond kindly to the prospect of a President Perry nixing their Social Security.
Still, one source close to the Perry camp says there is definitely an opening, pointing to polls that show “… nervous seniors even more nervous about their Social Security, but downright angry enough about it to demand that it be fixed.”
“There are old people in the tea party, too.”
Still, the White House moved forward the very next day with a combined $447 billion package much more broad-based than the $300 billion that was leaked in media reports. And despite the home run quality of the Thursday night speech, was it enough to push what amounts to another “stimulus” through a Congress still stuck on deficit reduction?
The true test of the message, of course, will be real world delivery. The White House may be able to push through the $240 billion proposed in payroll tax cuts — but, it’s the remaining amounts in spending that could stump the president’s agenda, including $62 billion in jobs programs and unemployment benefits extension; $35 billion keeping weary teachers, police personnel and firefighters on their jobs; $30 billion in school modernization; $15 billion for home and business rehabilitation; and $62 billion in infrastructure projects such as roads, bridges and other public works. These were the parts of the speech not garnering much applause from Republicans that night.
“It’s a little discouraging that he’s going to at some point give us additional responsibilities when we’re struggling to meet the ones we already have,” said Budget Super Committee member Sen. Robert Portman (R-OH), in a post-mortem ulcer after learning that the president wanted the new deficit reduction panel to find a way to pay for his plan – in addition to finding $1.5 trillion in cuts.
Committee co-member Rep. Xavier Becerra, (D-CA), seemed up to the task despite the heartburn in Congress. “[He] is right to focus the nation’s attention on the biggest deficit we face – the jobs deficit,” Becerra said in a statement. “How can we expect to balance the nation’s checkbook when 14 million Americans are out of work and having a hard time balancing theirs?”
WASHINGTON — Facing a frustrated public and a skeptical Congress, President Barack Obama will pitch at least $300 billion in jobs proposals aimed at getting Americans back to work quickly and forcing Republicans to take a share of the responsibility for solving the country's economic woes.
The underlying political strategy: If Obama can't get his ideas passed heading into his re-election year, he at least hopes to show why he shouldn't take the fall.
In a rare speech Thursday to a joint session of Congress, Obama is likely to offer a package of ideas that would affect people in their daily lives — tax relief, unemployment insurance, spending to support construction jobs, aid to states to keep people in their jobs. Businesses would get their own tax breaks. And he will promise a long-term plan to pay for it all.
Yet all of it ultimately will depend on a Republican-controlled House that has a different economic approach and no political incentive to help a Democrat seeking a second term.
White House officials said Obama would formally send his plan — coined by the administration as the American Jobs Act — to Congress next week.
Obama's chief of staff, William Daley, urged Republican lawmakers to abandon their politically driven refusal to work with Obama and take action on his jobs proposal. Daley declined to provide details of the president's jobs proposal, saying only that it would help teachers, construction workers, first responders and small businesses, and that many of the ideas have been supported by Republicans in the past.
"The only reason some of these people may not support it now is because of the politics that's going on, which is again unfortunate for the American people," Daley said.
He said the jobs programs would be paid for without borrowed money.
Obama is expected to propose paying for some of his jobs initiatives by closing corporate tax loopholes and increasing taxes on wealthier Americans, measures he failed to win during summer negotiations over increasing the nation's debt ceiling. Offsetting some cost of his economic plan with new tax revenue is likely to meet stiff resistance from Republicans, but the White House has argued that the public has supported a mix of spending cuts and revenue as a way to avoid higher deficits.
Daley said wealthy Americans "ought to pay a little more."
Obama's goal is also to put Republicans on the spot to act — in their face, and in their chamber. Obama is expected to speak for up to 45 minutes, beginning at 7 p.m. EDT.
Given the country's political and economic reality, two key questions hang over the president's speech: Will any of his ideas get approved, and will they actually work?
House Speaker John Boehner, R-Ohio, said he was hopeful that there would be some proposals the White House and Republicans could agree on.
"We know the two parties aren't going to agree on everything, but the American people want us to find common ground and I'm going to be looking for it," Boehner said.
But some other Republicans, including Senate Minority Leader Mitch McConnell, were criticizing the planned proposals even before the president had uttered a word. McConnell, a Kentucky Republican, said Obama seemed determined to simply reintroduce economic policies that haven't worked.
"It's time the president start thinking less about how to describe his policies differently and more time thinking about devising new policies," McConnell said.
A Pew Research poll out this week also found majorities of Republicans, Democrats and independents skeptical that the proposals Obama is expected to discuss would do a lot to create jobs. And a series of new polls by major news organizations finds that the mood is downright dismal about the direction of the country, with Obama's standing and approval on the economy at or near the lowest levels of his presidency.
Yet voters are holding all leaders accountable, supporting the White House's point that Congress is under pressure to act, too. An Associated Press-GfK poll found that more people assign chief blame for the economy to former President George W. Bush and congressional Republicans and Democrats than to Obama.
Democrats familiar with the president's plans say the White House sees the speech as a pivot point after spending the spring and summer focused on negotiations over deficit spending. They say the fall offers the president a window to press congressional Republicans to act on his economic plan — and if they don't, Obama will spend 2012 running against them as obstructionists. Whether that's enough to win over voters is another matter.
Obama's chief campaign strategist, David Axelrod, said the president won't start with ideas that have been "preapproved" by Republicans in Congress.
"Ultimately, the test for any of these ideas: Are they right? Can they help the economy? Can they help get people back to work?" Axelrod told The Associated Press.
The president's plan to pay for his ideas is a political necessity in a time of fiscal austerity. Deficit-boosting stimulus spending is out. But here, too, he is banking on a lot of help.
Obama plans to cover the cost by asking a new congressional supercommittee debt panel to go beyond its target of finding $1.5 trillion in deficit reduction by the end of November, so the extra savings can pay for short-term economic help. That debt panel met for the first time Thursday.
In one upbeat sign for those looking for a Washington compromise, Boehner and House Majority Leader Eric Cantor have told Obama they see potential areas of agreement on jobs — for example, infrastructure, which Obama has pushed repeatedly. Cantor also signaled to reporters Wednesday that he might support a payroll tax cut.
"It is not games and politics for people out across this country. It's real," Cantor said about the state of the economic debate. "The fact that we have had such sustained joblessness in this country, the fact that people are doing anything they can in many instances just to stay afloat and to pay the bills, it's real."
At the heart of Obama's plan will be extending, by one more year, a payroll tax cut for workers that went into effect this year. The president wants the payroll tax, which raises money for Social Security, to stay at 4.2 percent rather than kick back up to 6.2 percent. That tax applies to earnings up to $106,800.
Obama is expected to seek continued unemployment aid for millions of people receiving extended benefits. That program, too, is set to expire at year's end.
Among the other potential proposals by Obama:
—Tax credits for employers who hire.
— A major school construction initiative.
— Aid to local governments to prevent layoffs of teachers and other workers.
—Other tax help for businesses, such as continuing to allow them to deduct the full value of new equipment.
Since Obama took office in January 2009, nearly 2 million Americans have lost jobs. Almost 14 million people are out of work.
The unemployment rate, which stood at 5 percent at the start of the deep recession and 7.8 percent when Obama began in office, is at 9.1 percent. Most troubling is the trend line. After a period of steady if modest job creation, employers have stopped hiring. -- (AP)
There have been cries from certain segments of the African-American community that President Obama has not done enough for Black people.
Among those voices — perhaps the loudest from Tavis Smiley and Cornel West — were critics all the way from the barbershops and beauty parlors to the pulpits, academia and the highest Black social strata.
Some of that criticism — not the personal beefs of Smiley and West — is deserved. However, much more comes from lack of information about things that have helped African Americans because the White House, rightly so, did not separate and label the legislation as “for Blacks or minorities.”
The current American Jobs Act is such a document. Where there is not any minority specified language, there is a lot of aid for beleaguered Blacks, who at 16.7 percent unemployment are suffering their worst since 1984.
The bill calls for an extension of unemployment insurance for a year for those who have been out of work six months or more, and it’s well known who has the highest percentage of jobless people in their ranks.
This will aid 1.4 million African Americans and their families. Coupled with that will be a tax credit to businesses for hiring those who are long-term unemployed.
The president is also proposing reforms that will create a program tailored to support re-employment for the long-term unemployed by providing training while they look for a job.
By placing rebuilding and revitalization projects in communities hardest hit by foreclosures and retrofitting schools in large urban school districts, the bill should provide more jobs for minorities, women and socially and economically disadvantaged people.
The payroll tax holiday puts $1,000 to $1,500 in the pockets of 20 million working-class, Black people in the next year.
The bill also provides funds for the rehiring of teachers, firefighters, police officers and other public employees, and African Americans make up a healthy percentage of public workers across the nation.
The president also included a summer jobs program that will benefit teens and young people. Unemployment among Black youth is more than 32 percent.
It’s called The American Jobs Act not the African-American Jobs Act. It will help jobless and economically distressed people of all ethnicities — whites more than any — but, most importantly, this bill for all Americans doesn’t bypass those with dark complexions.