The New Direction: Unemployment jumps to 5.5%

posted at 12:50 pm on June 6, 2008 by Ed Morrissey

Up to now, employment had held steady through a rocky economy barely staying out of recession. In May, that changed for the worse, as unemployment rose to its highest level since October 2004. However, only 49,000 workers lost their jobs, which doesn’t nearly account for the four-tenths rise:

The government reported the U.S. lost 49,000 jobs in May as the unemployment rate rose by the largest amount since February 1986.

The Labor Department reported the fifth consecutive month of declines in nonfarm payrolls. The decline was better-than-expected however, as economists had been expecting a 60,000 job decline for last month.

The unemployment rate, which is calculated separately by a survey of households, soared to 5.5% in May. Wall Street had only been expecting a slight rise to 5.1%. It’s the highest the rate has been since October 2004.

The government reported that the number of people classified as unemployed jumped by 861,000 last month to 8.5 million. According to the Bureau for Labor Statistics, the increase in unemployed people is a reflection of job cuts as well as new and returning job seekers. It also said the unemployment uptick was “disproportionately large” among 16 to 24-year olds.

The real story here is unemployment among entry-level workers to the employment system. In summer, teenagers and college students enter the marketplace looking for seasonal and part-time work. This accounts for the significant rise in job-seekers and the 0.4% increase in unemployment. Otherwise, an overall job loss of 49,000 jobs would account for a 0.04% increase in a market of 138 million workers.

Why have these new job seekers found it difficult to get jobs? One reason is that Congress made jobs costlier just in time for this economic slowdown. Congress raised the minimum wage last year by seventy cents an hour, from $5.15 to $5.85. It will rise again in July to $6.55 an hour, and next year will hit $7.25 per hour. That makes entry-level labor as much as 27% more expensive this summer, when consumers have already slowed down their spending. The natural loss of work from the slowdown amplifies the effect of the minimum-wage increase, because businesses now cannot afford to raise prices to maintain their entry-level positions.

When the minimum wage increase was under debate last year, many of us warned that it would have precisely this effect. Now we see it unfolding before our eyes. Will the Democrats acknowledge the error and take the blame for hundreds of thousands of jobs lost to their economic meddling — or will they try to shift the blame to the Bush administration for no good reason at all? (via Power Line)

Update: As with all economics issues, I turn my attention to King Banaian, the chair of economics at St. Cloud State University, the blogger at SCSU Scholars, and my good friend:

 Aside what I think is a math error in that first paragraph (I think he means 0.04%, not 0.0004%), what he is proposing is that the higher minimum wage is inducing a large increase in the supply of labor. Setting aside the timing issue (did really all the teenagers wait until May to decide “hey, let’s get a job”?), we still have a 12% increase this summer, which is to have led to a 3.7% increase in labor supplied by teens two months prior to the change in wages. And most of these teens will give those jobs up by Labor Day. I don’t have a very good feel for teen labor supply elasticities, but Ed’s suggesting that the short run elasticity here is above 0.3, which feels high to me. In the long run, it would certainly be higher than that.

In terms of teen unemployment rates, though — which involves both supply and demand — the jump is quite large but not necessarily unbelievable if you think demand shifted down due to recession and then moved along the new, lower demand to reflect the minimum wage increase.

I fixed that error, and be sure to read King’s entire analysis of this report; it’s excellent.


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Comment pages: 1 2

What really happened last month: teenagers and college students flooded into the job market faster than illegal immigrants left.

Consequently, we now have many more unemployed Americans who are standing in line for jobs they would do that elitists say they won’t do.

indythinker on June 6, 2008 at 12:53 PM

“Maybe this will be the time when we all look back and say, this is the time! This was the moment when empolyment was at 5.5%”

moxie_neanderthal on June 6, 2008 at 12:54 PM

Hussein can add, “And everyone will have a job,” to his “absolute certainty” that “the lame will walk, the blind will see, and the seas will stop rising” speech.

Akzed on June 6, 2008 at 12:54 PM

How about the other reason for the unemployment jump is that for a lot of people, it costs too much to drive to work because the blasted gasoline prices are so damned high?!!!

pilamaye on June 6, 2008 at 12:55 PM

or will they try to shift the blame

It is common for them to NEVER take blame for anything. Even if they are the ones who pushed it through.

What democrat will accept blame when it comes to losing jobs?

upinak on June 6, 2008 at 12:56 PM

Hey move overseas and teach english… I did…

The job market here is great and they like The U.S.

tottoritodd on June 6, 2008 at 12:57 PM

While the increase in minimum wage appeals to employees making minimum wage, it actually costs those employees much more due to increased prices of goods and services resulting from minimum wage increase.

txsurveyor on June 6, 2008 at 12:57 PM

unlike half the people at home…

tottoritodd on June 6, 2008 at 12:57 PM

Will the Democrats acknowledge the error and take the blame for hundreds of thousands of jobs lost to their economic meddling — or will they try to shift the blame to the Bush administration for no good reason at all?

Is that a trick question?

ronsfi on June 6, 2008 at 12:57 PM

Spot the headline bias.

locomotivebreath1901 on June 6, 2008 at 12:58 PM

I bet the Democraps blame the Bush administration and I’m sure Karl Rove was behind this somehow.

saltydogg14 on June 6, 2008 at 12:58 PM

When the minimum wage increase was under debate last year, many of us warned that it would have precisely this effect. Now we see it unfolding before our eyes. Will the Democrats acknowledge the error and take the blame for hundreds of thousands of jobs lost to their economic meddling — or will they try to shift the blame to the Bush administration for no good reason at all?

you’re joking, right?

scottm on June 6, 2008 at 1:01 PM

I guess this means it’s time to raise teacher/professor salaries so that they in turn can raise tuition fees and accept more student loans for education since no jobs are around.

geminicontender on June 6, 2008 at 1:01 PM

— or will they try to shift the blame to the Bush administration for no good reason at all?

I think there is plenty of room for a third option — to blame the evil business owners who are too heartless to pay what Democrats have determined is a good minimum wage. Under that blame structure, they get to wail on the corporate dead horse they like so much. If only businesses were ethical (like the Democrats…), they would gladly bankrupt themselves for the good of a few workers in the short term. Frankly, I think I just inadvertently summed up Obama’s economic plan after you factor in his plans to raise capital gains.

Wineaholic on June 6, 2008 at 1:02 PM

John McCain will fix the unemployment problem.

By legalizing millions and millions of illegal aliens.

And crippling the economy to fight the global warming hoax.

misterpeasea on June 6, 2008 at 1:02 PM

but at least the democrats ‘care’.

they’re doing to the jobs what they’ve done to gas prices!!!

right4life on June 6, 2008 at 1:03 PM

Such an easy prediction to make, yet the politicians would rather pander and peddle populist crap to secure their jobs.

And the dumb masses keep gulping it down.

Justice.

LimeyGeek on June 6, 2008 at 1:03 PM

If Liberal’s think its so dire,
maybe they should open up soup
lines,like the 30′s! jus sayin!

canopfor on June 6, 2008 at 1:03 PM

I can’t live without my government. Where else can I get loans that need not be repaid. Where else can I go without identification or legality and still receive all the benefits that the middle class doesn’t have……..hmmmmm

geminicontender on June 6, 2008 at 1:03 PM

MCCAIN ’08: HE’LL FIX THE ECONOMY, BUT GOOD!

misterpeasea on June 6, 2008 at 1:04 PM

Wineaholic on June 6, 2008 at 1:02 PM

Oooohhhhhhh the EEEEVIL Business Owners. Lets hope these people never decide to open up a business and figure out how hard it actually IS now!

upinak on June 6, 2008 at 1:04 PM

or will they try to shift the blame to the Bush administration for no good reason at all?

I have already heard the Bush Administration AND McCain blamed for this on FNC about 1 hr ago. what McCain had to do with this I do not know (or the Bush Admin either). Congress, of course, is never to blame…unless it is a Repub Congress….

HawaiiLwyr on June 6, 2008 at 1:05 PM

MCCain ’08:HE”LL FIX THE ECONOMY,BUT GOOD!
misterpeasea on June 6,2008 at 1:04PM.

misterpeasea:That’s F-ck it McCain ’08.

There fixed that for ya! haha. :)

canopfor on June 6, 2008 at 1:09 PM

Uhhh…. whats it done in other years at this time?

Romeo13 on June 6, 2008 at 1:09 PM

However, only 49,000 workers lost their jobs, which doesn’t nearly account for the four-tenths rise:

Remember, it takes about a 150,000 monthly increase in jobs just to “tread water”.

Congress raised the minimum wage last year by seventy cents an hour, from $5.15 to $5.85. It will rise again in July to $6.55 an hour, and next year will hit $7.25 per hour. That makes entry-level labor as much as 27% more expensive this summer, when consumers have already slowed down their spending. The natural loss of work from the slowdown amplifies the effect of the minimum-wage increase, because businesses now cannot afford to raise prices to maintain their entry-level positions.

When the minimum wage increase was under debate last year, many of us warned that it would have precisely this effect.

I don’t think that there would be much of a problem with a measly $5.85 and hour or even a measly $7.25 and hour if campaign contributing anti-American employers weren’t allowed to hire illegals.

MB4 on June 6, 2008 at 1:10 PM

“Soared” to 5.5%?

Here in Michigan, we’d offer a crown to the Governor who could get the unemployment rate to 5.5%.

DRPrice on June 6, 2008 at 1:11 PM

In life there are only two truths: Death and Taxes

With Democrats, emphasize Taxes.

Kini on June 6, 2008 at 1:13 PM

MB4 on June 6, 2008 at 1:10 PM

What a lot of people do not realize, is just because the Federal Government raises the Min Wage, doesn’t mean all the States will. Most States have their own Min Wage, whic is usually higher anyways and do not go off the Federal.

Here is a neat little site I like to look at.

upinak on June 6, 2008 at 1:14 PM

The real story here is unemployment among entry-level workers to the employment system. In summer, teenagers and college students enter the marketplace looking for seasonal and part-time work.

And guess with whom they are competing.

ILLEGALS!!!

If the employers don’t do jail, we won’t hail.

If the employers do walk, we will talk.

If the employers don’t hang, it’s got no bank.

If the employers don’t do time, this one won’t rhyme.

MB4 on June 6, 2008 at 1:16 PM

“Seasonal unemployment occurs when industries have a slow season, such as construction and other outdoor work in winter. It … occurs at the end of the school year in June, when large numbers of students and graduates look for work. At its seasonal high point (January and February), unemployment in the U.S. between 1976 and 1986 was typically 20 percent higher than at the seasonal low (October). ”

So, June, a time impacted by Seasonal Unemployment… and unemployment goes up…

DUH!

Romeo13 on June 6, 2008 at 1:18 PM

John McCain will fix the unemployment problem.

By legalizing millions and millions of illegal aliens.

And crippling the economy to fight the global warming hoax.

misterpeasea on June 6, 2008 at 1:02 PM

Obama is just as much a global warming believer as McCain, if not more. Nor does he seem very keen on securing the border or doing anything about those illegals.

In other words, either way, we’re screwed.

Bigfoot on June 6, 2008 at 1:20 PM

pilamaye on June 6, 2008 at 12:55 PM

Ummm…not so much.

Connie on June 6, 2008 at 1:20 PM

upinak on June 6, 2008 at 1:14 PM

I know. I live in Oregon, which may have the highest minimum wage in the country. There doesn’t seem to be any shortage of “entry-level” jobs here though. If there is any problem, well, again anti-American employers using their illegals.

MB4 on June 6, 2008 at 1:22 PM

Isn’t the unemployment rate seasonal adjusted? Maybe not.

MB4 on June 6, 2008 at 1:24 PM

It couldn’t be that energy prices are so high that businesses can’t afford new workers.

It couldn’t be that food prices are so high that businesses can’t afford new workers

It couldn’t be that people are buying less therefore businesses have less profit and therein can’t afford new workers.

It couldn’t be that the rent on their property has increased substantially, or the loan on their business dwelling has foreclosed on them which would result in them not hiring new workers.

No, it must be that soon-to-be $1.40 increase in the Federally mandated minimum wage that results in business not being able to afford new workers.

ipso factum it’s the Democrats fault that unemployment is high, Democrats suck, Republicans are the geniuses; the world should be ruled by the never-wrong always right Conservatives. Can I get an Amen or is that only a Black thing?

PresidenToor on June 6, 2008 at 1:24 PM

The real surprise on the unemployment numbers to date is how low they are. Approximately 70% of all employment gains over the last eight years were related to housing and related industries. That bubble has burst.

Other parts of the economy must still be doing reasonably well to absorb the fall out from housing. That said the numbers will probably get worse for another year.

I would think, if there is validity to the minimum wage complaint, that it will most show up when businesses tentatively start adding new employers. They will add less at the beginning of the next expansion. At the moment with recession in the air-Buffet, Soros etc- most businesses are suspending new hires at any wage until they have a better idea going forward.

patrick neid on June 6, 2008 at 1:25 PM

MB4 on June 6, 2008 at 1:22 PM

OR is a weird little State though. They had such probelms with unemployement that they made Gas Station Business Owner pump people gas to get them to start working. It was also due to those on welfare. Yet OR is still having issues. I don’t get it… and OR isn’t having nearly the issues of illegals as some States because they are fighting back from what I know of it.

Very odd why unemployment is so dang high there.

upinak on June 6, 2008 at 1:26 PM

“Soared to 5.5%”

If the dims get the White House and Congress, “you ain’t seen nothing yet”. Higher taxes and global warming legislation will make that look like a dream. Exploiting racism and class envy has it’s price.

volsense on June 6, 2008 at 1:26 PM

Obama is just as much a global warming believer as McCain, if not more. Nor does he seem very keen on securing the border or doing anything about those illegals.

In other words, either way, we’re screwed.

Bigfoot on June 6, 2008 at 1:20 PM

That theme would make a good McCain bumper sticker.

Vote for John McCain
Everything that he does bad
Obama would do even more of it

MB4 on June 6, 2008 at 1:28 PM

Will the Democrats acknowledge the error and take the blame for hundreds of thousands of jobs lost to their economic meddling — or will they try to shift the blame to the Bush administration for no good reason at all?

Now you don’t really need to ask that question, do you?
You know that conservatives love to have people unemployed…now here is a question, just as rhetorical.
Do unemployed people vote more Democrat or Republican? Answer that and you will find out why unemployment is not a bad thing in some peoples eyes.

right2bright on June 6, 2008 at 1:29 PM

ipso factum it’s the Democrats fault that unemployment is high, Democrats suck, Republicans are the geniuses; the world should be ruled by the never-wrong always right Conservatives. Can I get an Amen or is that only a Black thing?

Let’s see. Let’s go back to the fall of 2006. Unemployment rate ~ 4.5%. Per barrel oil ~ $60 or 65. Now we have 5.5% unemployment and $130 per barrel oil. Both then and now, Bush was president. What changed?

Bigfoot on June 6, 2008 at 1:30 PM

The almost $15 run up in crude oil over the last two days, along with gasoline jumping 26 cents to new highs is not going to help either.

Should make for a fun weekend with all the pundits pointing fingers.

patrick neid on June 6, 2008 at 1:33 PM

They had such probelms with unemployement that they made Gas Station Business Owner pump people gas to get them to start working.

As long as I can remember people have not been allowed to pump their own gas here. Even when the logging industry was booming it was that way.

It was also due to those on welfare. Yet OR is still having issues. I don’t get it… and OR isn’t having nearly the issues of illegals as some States because they are fighting back from what I know of it.

No fighting back against illegals and those who employ them here. Not at all. Quite the opposite from our “leaders”

Very odd why unemployment is so dang high there.

upinak on June 6, 2008 at 1:26 PM

I’m not sure off the top of my head but I don’t think that it is that much above the national average.

MB4 on June 6, 2008 at 1:35 PM

DRPrice on June 6, 2008 at 1:11 PM

That’s because Michigan should be nicknamed “The Denial State” In W. Michigan where I was living until recently, they’ve lost all those manufacturing jobs and there is a real attitude from the displaced workers that if they hold on long enough the plants will reopen and everybody will be partying like it is 1959!

Granholm has made the problem much worse by not acknowledging the reality as she flits all over the globe looking for auto-related jobs instead of coming up with a real strategy.

highhopes on June 6, 2008 at 1:37 PM

Can I get an Amen or is that only a Black thing?

PresidenToor on June 6, 2008 at 1:24 PM

Amen.

MB4 on June 6, 2008 at 1:38 PM

It’s illegals to a large degree; or rather, the attendant problems of having illegals in our country in such large numbers.

Most of the jobs around here that used to employ college/high school kids (friends of my step kids many times), are now filled by employees who know about 15 words in English.

It’s not just the wage; unskilled labourers (which many illegals are), don’t take time off for school, have irregular work schedules because of extra curricular activities, want vacation with their families or anything like that. I read about 6 months ago that several illegals at a McDonalds shared a SS number; you can do all sorts of fancy salary footwork when 3 or 4 people are using the same Social.

As for benefits that others can’t get…

My mom lives in Texas. Her next door neighbour is a legal immigrant from Mexico; he’s a nurse and served in the US Army. He knows relatives of in-laws who are illegally getting benefits, and he tried to report them (which I think takes guts). He was told when he called in that no illegals could possibly be getting benefits and they hung up on him.

When I saw one of the leaders of the Hispanic caucus talking with Lou Dobbs a few weeks ago (we were waiting for a flight), and he claimed that no illegal applies for benefits that they’re not entitled to, I almost blew a gasket. Somehow every illegal is absolutely law abiding and everyone else is racist if you suggest otherwise… as if coming into the country illegally alone isn’t lawbreaking?

Of course my tax dollars helped to pay for WaMu’s stupidity in giving out loans to people who should never have qualified for them, but we didn’t get a stimulus cheque because we ‘make too much’. I’m REALLY tired of being categorised as greedy, when our tax money seems to go to help everyone else but us.

McCain, our glorious candidate (Endorsed by the NYT!), will enshrine all these problems into the fabric of America, and top it with the cherry of cap and trade. God help us. There may be a time when we longingly look back on the days of only 5.5% unemployment.

linlithgow on June 6, 2008 at 1:39 PM

Will the Democrats acknowledge the error and take the blame for hundreds of thousands of jobs lost to their economic meddling …?

HAhaha … oh wait, you were serious?

When the Pubs had the majority, unemployment was down to 4.5% They might wanna mention this in Nov.

Tony737 on June 6, 2008 at 1:40 PM

I run a small business and have plenty of extra work. The old days of hiring a couple of teenagers to come in and work for the Summer are long gone. Not only has the wage for unskilled, part-time workers increased, but employer FICA share, unemployment insurance and every thing else imaginable that a New England bureaucrat can impose is in place. I can work weekends, have my younger kids work here when school is out, and just forget about bringing in students to help through the Summer.

There’s two jobs right there, and you can blame folks like Ted Kennedy not President Bush.

Hening on June 6, 2008 at 1:41 PM

highhopes on June 6, 2008 at 1:37 PM

Ain’t that the truth! I was in Germany (little over a year ago) with my BF at the time and they had NPR radio in Berlin. Since we were both wanting to hear anything on American news, we decided to listen… and in the middle of us going home we heard the Michigan commercial. My BF at the time and I turned to each other and were like WTF?!?! Because the BF at the time was from Michigan as well.

upinak on June 6, 2008 at 1:43 PM

Just as an aside on Oregon, at least the Portland area. We are having the most un Global Warming weather in my memory. Almost summer and it is like March here.

MB4 on June 6, 2008 at 1:44 PM

And how many of that 5.5% just don’t want to work at all.

joeswampy on June 6, 2008 at 1:45 PM

Hening on June 6, 2008 at 1:41 PM

Not to mention they raised the Workman Comp across the Nation… and it includes people who sit at a desk.

I occationally do payroll for companies around here for extra money on the side. I asked why they uped Workman Comp insurance for Desk Jockeys… and it was because of all the hand and wrist injuries.

I about fell out of my chair.

upinak on June 6, 2008 at 1:46 PM

Let’s go back to the fall of 2006. Unemployment rate ~ 4.5%. – Bigfoot

Sorry Big, I wasn’t trying to steal your point. I gotta learn to refresh the page before posting. GMTA

Tony737 on June 6, 2008 at 1:47 PM

How about the other reason for the unemployment jump is that for a lot of people, it costs too much to drive to work because the blasted gasoline prices are so damned high?!!!

pilamaye on June 6, 2008 at 12:55 PM

That’s illogical. The money gained by having a job far outweighs the cost of getting to that job.

I’m sure gas prices have affected where people search for a job, but there’s no logical way it could convince them to not even look for one.

Esthier on June 6, 2008 at 2:03 PM

MB4 on June 6, 2008 at 1:44 PM

You aren’t the only one shivering.

upinak on June 6, 2008 at 2:04 PM

I caught this news brielfy on my local unbiased news sourse, NECN (New England Cable News).

It went something like this, “Unemployemnt JUMPED to 5.5%, the highest rate SINCE 1986. In all FORTY-NINE THOOOOUUUUUSAND workers lost their jobs.

I’m not exaggerating the way he emphasised the story.

Of course he then went on to mention gas prices….

reaganaut on June 6, 2008 at 2:04 PM

Esthier on June 6, 2008 at 2:03 PM

It has in my State. At 4.09 a gallon, in the big city, and you want to get a job with the rail road or tourists types or even guide services…. they are desperate for people but won’t raise their wages, because they can’t afford to either.

upinak on June 6, 2008 at 2:06 PM

PresidenToor on June 6, 2008 at 1:24 PM

Aside from what others have mentioned to you, did you forget that the greatest increase in unemployment is specifically from entry level jobs?

All of the things you name harm all businesses equally, so it surely accounts for some of the unemployment, but it doesn’t even begin to answer why one specific segment has seen a higher increase than others.

Esthier on June 6, 2008 at 2:06 PM

upinak on June 6, 2008 at 2:06 PM

I don’t understand what you’re saying. I get that gas prices are affecting the choices people make when deciding where to work, but it’s just not logical to say that people are deciding not to work due gas prices.

If a person can afford to not work, then the price of gas isn’t a problem for that person either.

Esthier on June 6, 2008 at 2:10 PM

How about the other reason for the unemployment jump is that for a lot of people, it costs too much to drive to work because the blasted gasoline prices are so damned high?!!!

pilamaye on June 6, 2008 at 12:55 PM

I am now paying $32 per day for my commute. I don’t know how much more I can afford.

carbon_footprint on June 6, 2008 at 2:15 PM

Dems probably knew this would happen, did it anyway to set up this big jump right now in election year and give them a talking point, aided by the media and ignorant voters.

jp on June 6, 2008 at 2:24 PM

No “Amen” for you….Increased energy costs can be laid right at the feet of the leftard envirowhackies…(No drilling, no refineries, no nuclear) ..Increased food prices are a direct result of that obstructionist policy…(converting food to fuel) Every other commodity is also negatively impacted by the high cost of transportation….therefor tighter profits, less expansion, and don’t for get “downsizing”…..soooo…..higher unemployment…exacerbated by summer work seekers….And I believe the same crowd forced the arbitrary minimum wage on the business community….All in all,it seems hardly probable that this situation can be laid on conservatives, as I think you implied…Nope!…no “Amen” here, unless you are from a Church called Trinity, somewhere in the nether regions of Chicago..

b4lucy on June 6, 2008 at 2:25 PM

Esthier on June 6, 2008 at 2:10 PM

I suggest you stop assuming everyone lives in a city.

My State, Alaska, has probably the worst communte (besides the eastern seaboard) to have. For someone starting out up here, depending on where they live, they have to drive an hour each way to get to work. Also, if you work for the rail road, the tourist industry, as a guide or having to commute for your job… they do not compensate you. You will be out of massive money for gasoline. Most jobs like this you drive 200 – 400 miles out of your way and that can be on a daily basis!

Also not many here want to give up their 4×4′s because honestly the snow is a pain and since it last longer then most up here, the front wheel drives do and can become stuck, even if they are more gas efficient.

I can assume it is like this across the Nation with people who do not live in a city because, who can afford a nice apartment or a decent house in them?

I like you and we usually agree, but not everyone is fortunate to live in the cities like you have or the outskirts close by.

upinak on June 6, 2008 at 2:26 PM

The minimum wage is philosophically dubious but lets get real here. We are talking about peanuts here. Whilst I do not like the big government aspect of this topic I think Ed’s argument is entirely specious and doubt he can prove his point. Chucking a dollar or so at minimum wage earners in our country is not going to cause a spike in unemployment in this country. To say that it is presupposes that we are so uncompetitive that that slight margin is all that stands between us and the sinkhole.

You’ll excuse me for not buying this supposition as it is hardly proved.

Ares on June 6, 2008 at 2:41 PM

In summer, teenagers and college students enter the marketplace looking for seasonal and part-time work. This accounts for the significant rise in job-seekers and the 0.4% increase in unemployment. Otherwise, an overall job loss of 49,000 jobs would account for a 0.0004% increase in a market of 138 million workers.

How do they track the number of college and seasonal employees not able to find work? Its not like they apply for welfare over it, right?

jp on June 6, 2008 at 2:43 PM

b4lucy on June 6, 2008 at 2:25 PM

nice paragraph!

upinak on June 6, 2008 at 2:46 PM

Most States have their own Min Wage, which is usually higher anyways and do not go off the Federal.

upinak on June 6, 2008 at 1:14 PM

It does go off of it in the sense that all have to be at or above the federal minimum.

Many states go above, but none can go lower.

Esthier on June 6, 2008 at 2:47 PM

How do they track the number of college and seasonal employees not able to find work? Its not like they apply for welfare over it, right?

jp on June 6, 2008 at 2:43 PM

Depending on the work, the payroll manager or HR dept fill out and file with the State a work sheet of the times, days and hours that a person woprks for them if they apply for unemployment. Some companies have good programs in which it can be printed out. The small businesses have to manually had write them. Trust me that is a pain unto itself.

But this is how my State works. Others may or maynot be like mine.

upinak on June 6, 2008 at 2:49 PM

Esthier on June 6, 2008 at 2:47 PM

We are above the Federal and have been forever.

But even if you get paid 15.00 to start it doesn’t add up.

15.00 to start, 1/3rd to tax, fica etc = 11.50 multiply that by over 8 over 40 laws we have here (lets say they work a normal 40 hr) at 4 weeks = 1850.00

That won’t pay for 300 a month gas (and that is being conservative) Rent, or food… not to mention other items, like internet, lights, etc.

I fell for those who pay income tax… and other unwarrented taxes.

upinak on June 6, 2008 at 2:53 PM

jp on June 6, 2008 at 2:43 PM

The unemployment rate is determined by a phone poll… they call and ask a random set of folks if they are working, or looking for work… and how long they have been unemployed if they are looking…

There is also a rate that is determined by who is getting unemployment, but since that stops at 6 months, its very deceptive in some industries.

Job loss and gain is figured by figuring out how many LARGE companies are gaining, or loosing, jobs.

Its all very subjective, and open to the massaging of data… because they take a LOT of people out of the pool by saying they are not looking for work… even though they are…

Romeo13 on June 6, 2008 at 2:55 PM

I suggest you stop assuming everyone lives in a city.

You’re the one jumping to conclusions as I never did assume that.

In fact, I don’t live in a city, at least not the way you seem to be implying. I do live within 2 miles of my job and sometimes take a bike to work, but I don’t live in the city, more like the suburbs.

For awhile I was living over an hour away from my job, so as soon as I was able to move, I found a place close by.

My State, Alaska, has probably the worst communte (besides the eastern seaboard) to have. For someone starting out up here, depending on where they live, they have to drive an hour each way to get to work. Also, if you work for the rail road, the tourist industry, as a guide or having to commute for your job… they do not compensate you. You will be out of massive money for gasoline. Most jobs like this you drive 200 – 400 miles out of your way and that can be on a daily basis!

And?

I’m not denying that it’s expensive, but so is eating and having a roof over your head.

You can’t do the two above without money.

And no, many people have it worse in LA, which was ranked as the worst commute in the US. An hour is bad, as I personally know, but it’s not the hell those people deal with on a regular basis.

I like you and we usually agree, but not everyone is fortunate to live in the cities like you have or the outskirts close by.

upinak on June 6, 2008 at 2:26 PM

You’re missing my point. I haven’t said that it isn’t an issue, but no matter how expensive gas is, it isn’t the reason people are deciding not to make a living.

What’s worse for a person, having to spend a lot of money on gas, or not even having the money to spend on gas in the first place?

Maybe people are deciding to work from home or to stay at home instead of going out to eat, but you can’t make money without a job. Yes, gas is expensive, but it doesn’t take as much money from a person as not having an income does.

We have no quarrel. I don’t even understand why you’re picking on my comment here. Gas is expensive, but even minimum wage pays enough to ensure no one spends more on gas than can be made in one day.

And even then, not having an income is not the way to save money on gas.

Esthier on June 6, 2008 at 3:00 PM

Thank you, Upinak…

b4lucy on June 6, 2008 at 3:03 PM

Aside from what others have mentioned to you,…
Esthier on June 6, 2008 at 2:06 PM

Nobody has mentioned much to me… I got one Amen from MB4 and another person followed a quote from my comment by stating that ‘Bush has been office since the large increse in oil barrel prices began.’

…did you forget that the greatest increase in unemployment is specifically from entry level jobs?

First off, working at McDonalds over the summer is not an entry-level job, unless you have the intention of becoming a manager and we don’t know the intention of all 16-24 yr. olds.

Secondly I didn’t forget that. I can easily answer why businesses aren’t highering more 16-24 yr. olds, in fact I could give you dozens of answers but I’ll just start with one – because their unskilled. Why should a business that’s functioning well enough to get by the higher energy and food prices, etc. during the the non-summer season hire more employees during the summer season when they’ve already got employees who are likely to be older working the shifts?

Furthermore businesses would be happy to pay $6.55 for an employee if they could afford their gas, food, and rent as well.

Another reason that there was a

“disproportionately large” [unemployment increase] among 16 to 24-year olds.

is because they have disproportiontely flooded the market place
during their non-school, summer, season. Undoubtedly, unemployment will go down when summer is over.

And as you stated:

All of the things you name harm all businesses equally…

exactly, so the higher minimum wage does not affect a certain age group of population, it affects them all equally…

What everybody here doesn’t seem to understand is that, it’s no one man’s fault that our economy stinks. In the 21st century (that’s the one were in btw) no single market factor has enough power to destabilize the market-place. It’s not just because minimum wage (a market factor) has increased, that 16-24 yr. olds are going to hell in a hand basket. There are several if not dozens upon dozens of factors that influence what ever market indicators we choose to look at. Thereby there are also dozens upon dozens of organizations and peoples behind each market factor upon which we can lay blame.

PresidenToor on June 6, 2008 at 3:04 PM

In college economics I learned that about 5.0% unemployment was “optimum” and that anywhere beteen 4.0% – 6.0% was “sustainable” unemployment. In other words, not likely to cause wage-based inflation in the economy or cause undue hardship. At those low levels, most of the unemployed are simply “between jobs” and when rates fluctuate between 4 and 6 percent, what you are seeing is the variation of time needed to land a new job. At 4% people find work quickly and at 6% it takes a little longer.

At less than 4% unemployment, you have employers attempting to out-bid other employers for the labor pool it needs and wages begin to spiral up. At over 6% you begin to have people unemployed so long that it because a real hardship. At 10% you have people who many not find a job at all because employers in their line of work are going out of business or some other fundamental change in the economy has made a huge number of jobs redundant.

5.5% is just fine, thank you. It probably means that it is taking people 6 weeks instead of 4 to land that new job.

crosspatch on June 6, 2008 at 3:10 PM

We are above the Federal and have been forever.

But even if you get paid 15.00 to start it doesn’t add up.

upinak on June 6, 2008 at 2:53 PM

I’m not disputing that. My statement was only about the federal minimum which sets the minimum for all states.

Esthier on June 6, 2008 at 3:14 PM

You’ll excuse me for not buying this supposition as it is hardly proved.

Not true.

You think companies are just going to absorb the costs of paying more to employees? They are going to realize less profit, or pay their executives less? This is the same flawed reasoning that applies to raising corporate taxes, “closing corporate loopholes”, and windfall prfit taxes.

So you get an extra buck an hour (oh and by the way, most minimum wage earners are not the primary earner in US households, and they are not full time jobs), what does that mean? Well your employer is going to make up for that cost somehow. If you’re talking a large company, a quick fix is to make do with a few less people.

Another solution is to raise prices, so your extra $1 an hour buys you less anyway.

Businesses operate to make money, corporations essentially operate to increase their stock price.

It’s all moot though, because most people aren’t out there working full time minimum wage jobs and trying to support families. All the talk about raising minimum wage is purely campaign rhetoric.

reaganaut on June 6, 2008 at 3:17 PM

Esthier on June 6, 2008 at 3:00 PM

My point is not everyone is as lucky. Seasonal jobs where you have to commute is killing people. Heck I live 5 miles at most from work, until I go back in to the Army, and gas is killing me and I make decent money. 100 dollars a fill up makes me want to cry. I am sure those who have to pay tolls are hating life, like carbon_footprint. 4 to 5 hundred on gas is more then I pay on my truck and insurance a month.

I know one person looking for a job who is taking the bus, but even that gets old because they don’t get close to anywhere the interviews are. They can’t drive due to no funds, but they are too proud to do unemployment. Which I think is awesome, but he should still get it.. he worked for it.

But I can’t imagine what it would be like on Minimum Wage… I wouldn’t be able to afford any gas. Especially if I owned a truck like I do now.

upinak on June 6, 2008 at 3:19 PM

I occationally do payroll for companies around here for extra money on the side. I asked why they uped Workman Comp insurance for Desk Jockeys… and it was because of all the hand and wrist injuries.

I about fell out of my chair.

upinak on June 6, 2008 at 1:46 PM

Let’s go back to the fall of 200

We hired a woman to answer a two line phone system. She quit the job because she got pregnant. She was engaged at the time and living with her boyfriend. After she became pregnant, some social agency talked to her about being a single mother, but she had to quit her job to get free rent, food stamps, free cable and free college. Meanwhile the guy she was engaged to is still living with her. They decide to have the baby out of wedlock and get all the “stuff”. She gets greedy and files for unemployment, even though she quit. I fought it since I did not want my insurance to go up. She claimed she had to quit since answering a two line phone was more difficult than she thought. She actually was awarded unemployment.

I’m sure here and her boyfriend are voting for Obama.

Hening on June 6, 2008 at 3:21 PM

I offered medical insurance (Kaiser Permanente) to the baby sitter who watches my kids and her daughter. She turned it down saying she would rather use the state “free” medical insurance for her and the child. She is also living with a man who works full time, has a car, cell phone, cable tv, internet access, yadda yadda yadda

crosspatch on June 6, 2008 at 3:25 PM

Hening on June 6, 2008 at 3:21 PM

DAMN! What State is that? Talk about Fruad!

I had a simular situation with an employee. Seasonal Slope worker (worked for me taking care of the oil field workers), who claimed she was to pregnant to work.

She quit and filed for unemployment, which I didn’t have a problem with until I read why. She said she had quit because of range of motion issues, not because she was pregnant, and even had a workmans comp claim for it she never disclosed to us, her employeer. I had her investigated and she lost her unemployment as well as any welfare benefits for 3 months because she lied about being pregnant. It was a total mess. She tried to sue to company as well and lost. I was the head Payroll Manager at the time. Talk about stressful and annoying.

upinak on June 6, 2008 at 3:29 PM

I don’t understand what you’re saying. I get that gas prices are affecting the choices people make when deciding where to work, but it’s just not logical to say that people are deciding not to work due gas prices.

If a person can afford to not work, then the price of gas isn’t a problem for that person either.

Esthier on June 6, 2008 at 2:10 PM

It does if you’re talking about seasonal work and teenagers. If they can’t clear a certain amount after taxes, paying for gas, etc, etc, etc… then why work? It’s a combination of being jaded, mommy and daddy supporting them too much, and competition from illegals (which DOES exist!).

I would also submit that there may be more people “working under the table” by doing odd jobs to make up for the gas prices by not paying taxes… and thus not getting recorded as working.

dominigan on June 6, 2008 at 3:30 PM

Will the Democrats acknowledge the error and take the blame for hundreds of thousands of jobs lost to their economic meddling — or will they try to shift the blame to the Bush administration for no good reason at all?

Fairly obvious answer:
They will try to shift the blame to the Bush administration for no good reason at all because the Socialist attack is constant.

One thing Scott McClellan got right is that there is a culture of perpetual campaign posturing in Washington. What he missed is that it is the Democrats who are the biggest offenders. EVERYTHING they do is political posturing.

Red Pill on June 6, 2008 at 3:36 PM

People can (and will) ignore the entire history of economics when they WANT something. And then when they get it and it isn’t as shiny as they thought, they get mad, and still ignore the entire history of economics.

June Unemployment surges happen EVERY YEAR, and EVERY YEAR the press reports it as if it were a new thing, just like EVERY YEAR gas prices go up in the summer and EVERY YEAR it’s hotter in the summer than in the winter.

The MSM has an attention span of about 10 minutes, and history began for them some time this morning.

Yes, minimum wages affect unemployment. They also affect the prices of goods and services. This is only controversial because some people really, really, really want something SO BAD that they’re willing to ignore economics, history, even math to do so.

Merovign on June 6, 2008 at 3:53 PM

First off, working at McDonalds over the summer is not an entry-level job, unless you have the intention of becoming a manager and we don’t know the intention of all 16-24 yr. olds.

An entry level job is defined as such because of the intentions of the people that work at it. A job is entry level because it has no prerequisites that would keep an unexperienced person from taking it.

So yes, McDonalds is an entry level job unless you’re applying for the position of manager.

And to clarify, we don’t know the intentions of ANY workers, not just 16-24 year olds.

but I’ll just start with one – because they’re unskilled.

The very definition of the job is that all the employees who work there are unskilled.

Why should a business that’s functioning well enough to get by the higher energy and food prices, etc. during the the non-summer season hire more employees during the summer season when they’ve already got employees who are likely to be older working the shifts?

Why would they hire summer work? They do it every year. They also hire Christmas work.

You don’t understand why?

In summer, as in the winter, many people take vacations and as such, jobs like this which are driven by customer service have a rise in the demand for their product.

They don’t hire more people during this time period just because they can waste the money. They do it because they have to.

Furthermore businesses would be happy to pay $6.55 for an employee if they could afford their gas, food, and rent as well.

That’s illogical. If a business is trying to make money, then it will pay employees, especially unskilled employees which are exactly the people we’re talking about, as little as possible. That is how a business can maximize its profits.

If it wants people to stay in order to keep training costs low, it will give out raises or offer benefits, but it’s not “happy” to pay more when less will suffice. That’s not how you run a business.

Another reason that there was a “disproportionately large” [unemployment increase] among 16 to 24-year olds. is because they have disproportiontely flooded the market place during their non-school, summer, season.

And how is that different from every other year?

It isn’t.

exactly, so the higher minimum wage does not affect a certain age group of population, it affects them all equally…

No, that too makes no sense. There are plenty of jobs that don’t pay minimum wage. Where I work, the starting pay is 9 an hour. It’s not much, but when minimum wage was 5.15, it was much more attractive.

Even still, we haven’t raised our entry level pay and thus are completely unaffected by the raise in minimum wage.

And you still haven’t proven your final point. The only thing different specifically for 16-24 year olds right now is that minimum wage has been raised.

Raises in gas prices and other issues affect all business, not just ones hiring that age group, and every year students flood the job market in the summer.

Esthier on June 6, 2008 at 4:02 PM

I am sure there are many reasons for unemployment to go up right now. A couple of weeks ago I read that the government said they expected the rate to go up to about 5.8% this year at least, even if there is not a recession.

I would imagine the slower growth, higher minimum wage, the recent layoffs in the airline and auto industry are also part of the problem.

As for illegals, well we have been listening to obsessives complain about that since the unemployment rate was 4.5%. And there are jobs Americans will not do. Americans do not want to do a lot of the ag labor that migrants have been doing for decades. I used to farm, I have seen times when it was impossible to get a hay crew. I have known farmers who have gone from growing labor intensive crops to row crops just because they could not find any help. And I know people will say that is lie, but it is not.

So maybe this is part of cyclical slowdown driven by several factors. Higher energy prices and higher wages and less demand for products and services.

Terrye on June 6, 2008 at 4:06 PM

My point is not everyone is as lucky.

I’m not saying everyone is, but do to without an income is not the solution.

But I can’t imagine what it would be like on Minimum Wage… I wouldn’t be able to afford any gas. Especially if I owned a truck like I do now.

upinak on June 6, 2008 at 3:19 PM

Well, minimum wage isn’t for someone like you. It’s for people with little or no job experience, and no one stays there for long. Even at 16 I was able to find several jobs that paid more, and the ones that only paid minimum offered overtime.

dominigan on June 6, 2008 at 3:30 PM

And in your scenario you’re still talking about people who don’t need to work, which is something I addressed.

Esthier on June 6, 2008 at 4:08 PM

And there are jobs Americans will not do. Americans do not want to do a lot of the ag labor that migrants have been doing for decades.

Correction: They don’t want to do it for the low wages currently being offered.

Esthier on June 6, 2008 at 4:10 PM

Terrye on June 6, 2008 at 4:06 PM

If they could do something like have the “non-offensive” prisoners help out farmers for more labor intensive crops. They have them in certain States… I don’t see why it couldn’t spread to others.

Or give tuition breaks for kids going to college, if they help the farmers, make a small profit themselves AND not have to pay taxes… I bet a lot of Kids would do it. Something on that scale. I don’t see why it wouldn’t help the economy, the kids.. etc.

Or I am just in a dream world… blah

upinak on June 6, 2008 at 4:12 PM

Esthier on June 6, 2008 at 4:08 PM

Ok I will agree with you there. No job I have ever had has been Minimum Wage, but there were some that were dang close at one time when I was younger.

upinak on June 6, 2008 at 4:13 PM

So job losses were 11,000 LESS than expected, and the market still tanks? That don’t make no sense at all.

SoulGlo on June 6, 2008 at 4:24 PM

Ok I will agree with you there. No job I have ever had has been Minimum Wage, but there were some that were dang close at one time when I was younger.

upinak on June 6, 2008 at 4:13 PM

Oh I know the feeling, and it’s very tough. When I was first married, my husband and I were waiting tables. On a bad day we’d take home 30 bucks, total. Luckily we’d make it up on good days.

Then when we started working where we still are today, we were each taking home less than 300 a week and were genuinely poor. Though somehow, we managed to not only make it without help but also put money away each week.

I’ve been there and made it through without getting into debt other than college loans, some of which almost aren’t worth paying off yet. It’s meant that we don’t go out as much as some people, that we only buy used cars and only have one running at a time, that we usually don’t have cable and only second-hand furniture, but people are often far more capable than they realize.

Esthier on June 6, 2008 at 4:25 PM

You’ll excuse me for not buying this supposition as it is hardly proved.

Ares on June 6, 2008 at 2:41 PM

I once worked at a place that hired that exact age group and at times was responsible for watching our productivity so that if it got too low I could send people home.

The business can’t make a profit if it’s spending more per hour than it’s making.

It’s simple math.

If you have five people working at 5 an hour, it costs the company 25 dollars per hour. If those same people are now suddenly making 6, it’s now 30 an hour, the cost of adding a sixth person.

Maybe it’s not the only reason, but it certainly doesn’t help, especially in an industry where workers are already expendable.

Esthier on June 6, 2008 at 4:31 PM

Esthier on June 6, 2008 at 4:25 PM

Been there done that. I may work in the oil and gas industry, but I am far from rich, more the bottom rung that deals with everything. I have a student loan and a truck payment… rent and such is the norm.
I also don’t go out much, if at all. I have a used truck, 2000 that runs great… who can afford a new one? 30K I would rather put on a house. I go fishing mostly for my pleasure anymore. I use to take a lot of vacation out of here, now I just give it to the loans I have to pay them off faster.

upinak on June 6, 2008 at 4:33 PM

Democrat Definitions:

“Criminal”: Business Owner

“Master Criminal”: Business Owner with at least one employee

“Enemy of the State”: Incorporated Business with many employees

(if you don’t believe it, you’ve never been in business!)

landlines on June 6, 2008 at 4:51 PM

upinak on June 6, 2008 at 4:33 PM

Alaska is so beautiful anyway. A weekend camping trip there would be a nice vacation.

It could be like that here in Texas, but it’s just so hot and in many places flat and empty.

Funny though how miles and different climate separate us, but we can still come here and commiserate.

Here’s my virtual toast being raised…

Esthier on June 6, 2008 at 4:53 PM

Esthier on June 6, 2008 (anytime)

It’s very hard to argue with such idiocy as:

The very definition of the job is that all the employees who work there are unskilled.

We run a business, and were not about to hire a person who is not skilled at the cash register, food preperation, stocking, etc.

Every job requires a skill, which is not limited to a collegiate degree. For that matter, an entry level job is not defined by your mental bounds, why don’t you use the google and educate yourself on that.

PresidenToor on June 6, 2008 at 4:59 PM

Hey move overseas and teach english… I did…

The job market here is great and they like The U.S.

tottoritodd on June 6, 2008 at 12:57 PM

where are you? I’ve heard that teaching English in Japan is a good gig.

funky chicken on June 6, 2008 at 5:46 PM

If Obama wins, next February we’ll see headlines like “Economy Last Year Not As Bad As Previously Thought”.

Burn in hell, dinosaur media!

SouthernGent on June 6, 2008 at 6:25 PM

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