The economy added 214,000 jobs last month, and the unemployment rate ticked down to 5.8 percent, according to Friday's federal jobs report.
The fly in the ointment was the same fly that's been in the labor market ointment for years now: Wages are stuck.
Average hourly pay rose three cents last month. And to some extent this all makes perfect sense. Economists say after a recession there’s a natural order to a recovery.
Wharton economist Kent Smetters says to think of a recession like a monster fire that burns down the forest where,“you get a lot of job growth, that’s the trees growing up. But as they get taller they are competing for sunlight and that’s kind of the wage growth.”
Smetters says in this most recent jobs report wage increases are barely keeping up with inflation. But in some industries that’s changing.
“Trucking and manufacturing as well as some of the professional services like lawyers and accountants you are seeing higher wage growth,” he says.
Smetters thinks wages haven’t come around yet, in part because the recession left so many without a job. Smetters bets it could be another nine months before enough people flood back into the workforce to push wages up. If that does happen, “profits would not rise as fast in the future as they have in this economic recovery,” says Brookings Institution economist Gary Burtless.
And remember, Burtless says, business profits have hit record highs almost every quarter. Maybe it’s time for a bigger share to go to workers, he says.
“If they had more spending power that could boost consumption and boost the reason for employers to add to their pay roles because they can sell more stuff, more easily,” he says.
Burtless says while plenty of folks in Washington keep banging the job growth drum, voters sent an altogether different message when they supported every minimum wage hike on the ballot.
John Shields, who led the grocery company Trader Joe's from 1988 to 2001 and took it from a small Southern California chain to a nationwide retailer, has died. He was 82.
When Shields took over the business from his fraternity friend and company founder Joe Coulombe, Trader Joe's was a chain of 27 stores in Southern California.
He engineered a plan to reinvigorate the company and expand it nationally. There are now some 400 stores across the country, most recently in Idaho and Colorado.
"They have almost a cult-like following," says David Livingston of DJL Research. "They don't try to compete with big chains, ... they grow very slow and methodically, because they're very conservative financially and they're extremely cautious."
Those are values John Shields instilled in the company. But he also invested heavily in the Trader Joe's brand by asking his small team of buyers to becoming Research & Development experts - to travel the world seeking out new and interesting foods. He also branded those foods with the Trader Joe's logo.
"Much of what they sell is their own... label stuff," says Jon Springer, retail editor at the trade publication Supermarket News, "You can't buy Trader Joe's brand tortilla chips in any store."
That exclusivity has given the grocery chain an edge and it was very much a deliberate part of John Shields' strategy.
"We set our own rules on how we were going to run our company. We were going to develop the product, put our names on them. And these are the kinds of decisions that differentiate yourself from your competition," Shields said in a 2010 speech at the Corporate Leaders Breakfast Series at California Lutheran University.
In the last decade, the expansion that Shields began has continued. The company — which is private and notoriously secretive — is estimated to generate about $11 billion in revenue, according to Supermarket News.
"Today, they're the kind of company that... communities that don't have Trader Joe's have Facebook pages urging them to come," says Springer, "there's a lot of excitement when they do come to a city."
After all, how many grocery chains do you know with their own fan-written song?
The jobs report today announced 214,000 new jobs last month. The unemployment rate dropped to 5.8 percent.
Except maybe not.
The Bureau of Labor Statistics tells us the jobs report is accurate to within 90 thousand jobs plus or minus, and 0.2 percentage points on the rate.
So maybe it's 124,000 new jobs and a 6 percent unemployment rate. Probably not, but maybe.
As economic actors, we all act in accordance with costs and benefits, right? Gas prices are down 30 percent, there’s benefit there.
But what of the long-term environmental costs of climate change? We tend not to be urgent about that. And economists and social scientists are entirely not surprised by this.
There are countless examples of people failing to plan long-term: smoking, grabbing that third doughnut, failing to save for retirement, burning fossil fuels.
The cost or benefit is too far away.
“Imagine somebody offered you some investment,” says behavioral economist Dan Ariely of Duke, author of Predictably Irrational. “And they say here’s an investment you can pay now. And you can win 1,000 times more. But in 200 years. Would you invest in that? And people are just not designed to do this."
People do react when emotions are stirred. Imagine an enemy burning the globe.
“If we thought that the Martians were trying to bake us, imagine there was a conspiracy theory that global warming was not manmade but these Martians were really trying to cook us and they have these devices,” Ariely says. “We would have spent a tremendous amount of money creating spaceships and so on to fight them back, because there was a way to direct our emotions.”
It’s not that scientists aren’t loud about climate change. The latest report warns of “irreversible impacts” of global warming, and 95 percent confidence that humans are the main cause.Courtesy of IPCC
We just don’t listen to them.Courtesy of Yale/George Mason University
Global Warming's Six Americas.
“If you’re green, you’ll trust Bill McKibben. And if you’re brown, you’ll trust George Will,” says risk perception consultant David Ropeik, author of “How Risky Is It, Really?” “It doesn’t matter what the facts are. It matters whether you trust who is giving them to you, because you want to be true to the tribe.
In fact, some go so far as to argue there’s too much science out there.
“We’re well past the point where messaging the science or trying to communicate about the science more effectively is going to change anyone’s opinions,” says Northeastern University communication scholar Matthew Nisbet. “If anything, that’s going to move people to the poles.”
That’s poles, not polls. In this year’s midterm, climate was hardly an issue. According to a Pew poll, voters ranked it eighth in importance out of 11 issues.
Many people have written it off as faraway problem.
“People have been hearing about climate change for a couple decades now,” says environmental scientist Ezra Markowitz of the University of Massachusetts Amherst. “The earliest messages that were put out there about this issue was it was an issue that was going to affect other people, other species, not us today. It’s very difficult, if not impossible, to just get rid of the things that people already know and think about an issue, especially a complex issue like climate change.”
Markowitz and others say the key is to bring a long-term issue closer to people’s lives and everyday thoughts. One bank website even takes your photo and ages you electronically, to make your future more real.
If that doesn’t work, events will eventually focus people’s minds, perhaps first in low-lying areas and those with more irregular weather patterns.
“In the summer of 2010 there was a horrible heat wave in Moscow,” says Matthew Kahn, UCLA economist and author of Climatopolis. “And it killed thousands. Nobody in Moscow had an air conditioner. In the aftermath of that event, thousands of people have purchased air conditioners there. The people have adapted and changed their lifestyle to be ready for the next shock.”
Adaptation may come too late for some. But self-interest is a true climate-change motivator.
Social scientists weigh in on why we don't care about climate change
A crash course in climate change sociology
Social scientists understand that people aren't that concerned about climate change. And yet they still see climate change as a huge issue. Here are some tools to help get inside the mind of a social scientist and see things from their perspective starting with some key concepts and terms.
Availability heuristic: people think of immediate examples when evaluating a topic, concept, method or decision. Things that come to mind easily are thought to be more common and accurate reflections of the world. This can cause people to make bad assessments of risk.
Free-rider effect: individuals in a population who consume more than their fair share of a common resource, or pay less than their fair share. Or a person who gets something without effort or cost.
Cultural Cognition: the tendency of individuals to conform beliefs about disputed matters to values that define a cultural identity. People conform their beliefs with the group they are in.
Identifiable Perpetrators: the tendency of individuals to offer aid or punishment when a specific identifiable person is observed, rather than a large, vague group.
Population of Mister Spocks v. Homer Simpsons: I think this one speaks for itself.
Kevin Ashton created an internet celebrity named Santiago Swallow for 68 dollars.
He blended three faces from portraits from Google images to create Swallow’s face using a free trial of Adobe Lightroom. He made a website. He bought Swallow 90 thousand Twitter followers online.
As part of his social experiment, Ashton used an online application called Status People. The website claims to tell you how many of your Twitter followers are real, inactive or what they call fakers, also known as Twitterbots.
I was suspicious. How can Status People actually differentiate between a bot and a real person?
For example, according to Status People only about 40 percent of Justin Bieber’s Twitter followers are real. So that would mean 33.6 million (give or take a point million) of his 56 million followers are fake or inactive.
Social status today is defined in part by social media. The difference of a few million or even a few thousand Twitter followers is huge. It determines your Twittersphere hierarchy, your social media power ranking, your on and offline reputation.
So I started thinking: who else? What about Lizzie O’Leary?
Turns out, according to Status People, Lizzie’s Twitter followers are 21 percent fake, 29 percent inactive and 50 percent real, active, contributing members.
And what about the official Marketplace Weekend account?
And of course, what about me?
I am far from a Twitter celebrity: At 188 followers (more or less depending on the day) and only about 300 tweets, I realize that by Twitter standards I’m not exactly a big deal. But come on, I had to know.
According to Status People only 1 percent of my followers are fakers and 23 percent are inactive. That’s pretty good—or at the very least better than Bieber. But mid-gloat I hit a snag.
When the site analyzed my followers, its metric determined that two of them were fakers. This whole time, I thought this app was weeding out robots, but both of my “fakers” are real people. Like, I-know-them-in-real-life, real people. One of them is my grandma.
So my suspicions were confirmed: Status People isn’t guaranteed to differentiate between bots and humans.
On Status People’s website, they list part of their methodology like this: “On a very basic level spam accounts tend to have few or no followers and few or no tweets. But in contrast they tend to follow a lot of other accounts.”
So it makes sense why Status People thought my grandma was a bot. She has zero tweets, zero followers and she is following one person—me.
The process of telling the difference is tricky, according to Dr. Steven Gianvecchio, co-author of the paper “Detecting Automation of Twitter Accounts: Are You a Human, Bot, or Cyborg?”
“I think that one of the problems you run into with Twitter is there are a lot of shades of grey,” he said.
Dr. Gianvecchio said sometimes accounts are partially automated, like if someone auto-tweets their blog. And most people don’t have a problem with that sort of automation.
Profiles like my grandma’s, however, would be considered unwanted, according to Gianvecchio.
“Those accounts, most people would consider to be unwanted because for the most part you really want to be interacting with other people,” Gianvecchio said.
So while Status People isn’t perfect at differentiating between bots and humans, it does weed out these unwanted followers who aren't interacting.
This is what I labeled the “grandma paradox.”
On one hand, my grandma serves no purpose on Twitter. She’s not a contributing member of social media, so there’s really no reason for her profile to exist. Sorry grandma, you might as well be a robot.
But on the other hand, my inner narcissist says, go ahead, grandma! In fact, tell all your grandma friends to make useless profiles and follow me too. The more the merrier, as long as my follower account is high.
And that’s probably how Justin Bieber feels too. It doesn’t matter that millions of his followers are robots, or might as well be, as long as some of his followers are real and interacting.
Gianvecchio emphasized quality over quantity. “I think that the number of followers that someone has is a meaningless metric at this point,” he said.
Is it legal for a state-sponsored health exchange to provide subsidies that help people pay insurance premiums? That's the point in question, and one that's still being considered by an appeals court.
This week, we spotted the technology to test who you are and where you come from, parked across the street from New York's Grand Central Station. It's a mobile DNA truck, offering access to a technology that, not too long ago, wasn't readily available.
Lizzie O'Leary met the owner, Jared Rosenthal, outside his truck.
After two recent high profile accidents: the crash of Virgin Galactic's spaceshiptwo, which killed the pilot and injured the copilot, and the explosion of Orbital Sciences Antares rocket, we wanted to know more about the future of commercial space.
Mike Gold, the chairman of the FAA's Commercial Space Transportation Advisory Committee also works extensively with Bigelow Aerospace as their Director of DC Operations. Bigelow is a space start-up planning to launch their own space station in the future.
"I don't think anybody sees these failures and says, 'Well, that's a great thing.' I can certainly assure you it wasn't beneficial. But what was extraordinary to us was the success, the amazing consecutive successes that the Falcon 9 and the Antares had up to this point," Gold says. "Not that there was a failure. So if anything the performance, particularly of the pace X systems, have exceeded our expectations."
"We hear far too often that commercial entities will be less safe than government programs when exactly the opposite is the case. You talk about Mercury and Apollo and other programs. They to an extent could suffer failure more easily than a commercial program because if you look at the activities of these purely commercial entities, such as Virgin Galactic, it's their own money, their own investors, and they don't necessarily have the depth of resources," Gold says. "Which is why, quite frankly I think there is at least an equal if not a stronger focus by these commercial and private sector companies on safety and success because if we fail, our jobs go away, the programs go away. And that's not necessarily the cause with government programs."
The Labor Department just released the jobs report for October. It says the economy added 214,000 new jobs last month.
The unemployment rate fell to 5.8 percent, from 5.9 percent.
But there's more to the jobs picture than just those numbers:
There's a missing piece of the puzzle - and it's wage growth. Pay checks aren't going up much.
Today's jobs report showed average hourly earnings up by 3 cents last month. Wages were flat in September.
Part of the reason for that may be that there's still some slack in the job market.
Employers aren't having to raise pay to attract workers. They have plenty to choose from.
"The fact that wages have not really moved suggests that there is a lot of slack and that employers are still holding all the cards," says Elise Gould, senior economist at the Economic Policy Institute. "There are still many workers out there for every job opening."
The Federal Reserve is watching these numbers closely, as it tries to decide when to raise interest rates.
It's not going to be in any rush to raise interest rates, as long as there's still that slack in the labor market.
When we start to see the slack going away - when wages start going up more - then the Fed will start thinking it may be time to hike interest rates.
Which, by the way, have hovered near zero for almost six years.
As part of our program's 25th anniversary, we've been tracking the odd ways prices have changed over that period. According to a cellular phone industry group, the average monthly cell phone bill has dropped from an inflation adjusted $151 back in 1989, to $47 today.
A 69 percent drop? How is that possible?
Michael Grubb is an economics professor at Boston College who has studied the cell phone market.
Listen to the full conversation in the audio player above.
As part of our program's 25th anniversary, we've been tracking the odd ways prices have changed over that period. According to a cellular phone industry group, the average monthly cell phone bill has dropped from an inflation adjusted 151 dollars back in 1989 to 47 dollars now. Plus: Chris Low of FTN Financial gives us some perspective on the 214,000 jobs added to payrolls this month.
UPDATE: October's numbers are in from the Bureau of Labor Statistics: 214,000 jobs added, and the unemployment rate "edged down" to 5.8 percent.
The monthly employment report from the Department of Labor will likely show the economy added approximately 240,000 jobs in October, and unemployment held steady at 5.9 percent, after falling below 6.0 percent in September for the first time since mid-2008.
Economists can point to steady improvement over the past several years in those two statistics—job creation, and the unemployment rate (which was 7.2 percent in September 2013, and 9 percent two years earlier).
Yet, this ‘official’ unemployment rate doesn’t accurately characterize many aspects of the labor market right now—in particular, how hard it still is to land a middle-income job; how easy it is for employers to find qualified candidates; and how little those employers have to compete with each other over wage and benefit offers, in order to hire the workers they want.
The ‘official’ unemployment rate—called the U-3 by the Bureau of Labor Statistics—only counts how many people are actively unemployed. They’re looking for work and actually applied for a job in the past four weeks.
But right now, the number of people who are not working, but would like to work, is unprecedentedly high. These people have given up looking—possibly because they don’t think any jobs are available for them, or perhaps to attend school and upgrade their skills, or to go into semi-retirement. They’ve pushed down the labor force participation rate to its lowest level (62.7 percent in September) since the late 1970s.
Combine these discouraged and marginally attached workers with the ‘underemployed’—people who would like to find better-paying full-time jobs but can only find part-time jobs—and total unemployment (the U-6 rate), as measured by the BLS, is averaging well over 12 percent in 2014 (it was 11.8 percent in September).
Economists have anticipated that some attrition in the labor market would occur when the Baby Boomers began retiring earlier this decade. But in fact, after the recession, older workers have stayed on the job longer than was predicted, on average. With retirement savings and home equity depleted by the recession, older Americans are holding on to jobs if they can.
“Where we’re seeing large declines in labor force participation is actually among prime-age workers,” explains University of California-Berkeley economist Jesse Rothstein, “especially among people in their early twenties. It’s hard for me to believe that there’s this enormous group of people in their early twenties who have decided that they’re never going to work.”
Rothstein and many other economists believe the economy hasn’t changed structurally so that fewer people want to work or feel the financial need to work. Rather, they think the labor market is simply too weak, and demand in the economy too anemic, to employ all the potential workers who want and need jobs. They believe if the economy strengthens significantly, many of those potential workers will come out of the woodwork and begin job-hunting again.
Absent such improvement, the labor market is likely to remain slack, even if the official unemployment rate continues to decline steadily and eventually dips below the Federal Reserve’s target of 5.5 percent. Fed policymakers, led by chair Janet Yellen, have said they are looking at other labor market indicators in addition to the unemployment rate, to make sure they don’t withdraw economic stimulus and kill the nascent recovery before it’s helped the hard-core and long-term unemployed, the underemployed, and discouraged workers.
Rising wages are now considered a key harbinger of labor-market tightening by market participants and Fed policymakers, explains economist John Canally at LPL Financial.
“I think that’s the ultimate indicator—to get wage growth back to normal, back to the 3.5-percent-to-4.5-percent gains we saw prior to the Great Recession,” said Canally. “Then I think there’ll be confidence that businesses are finding it more and more difficult to fill jobs.”
In recent years, average hourly earnings have been rising in the 2-percent-per-year range, just keeping pace with inflation.
Another indicator of a tightening labor market would be a reverse in recent declines in labor force participation, especially among prime-age workers. If more people who have dropped out of the workforce, or never entered it after high school or college, started looking for work again, that might raise the unemployment rate temporarily. But it would be another sign the economy is truly on the mend.
Short-term certification programs are on the rise, according to a study by the American Educational Research Association.The number of certificates awarded from programs requiring less than a year of full-time study increased how much between 2000 and 2010?