Explaining Southern California's economy

The bad news in the good jobs news

A jobs sign hangs above the entrance to

KAREN BLEIER/AFP/Getty Images

A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC.

Today's jobs report was pretty solid. Not supergood, but miles from superbad. I went on "AirTalk" with Larry Mantle this morning to hash it all out with Christ Thornberg of Beacon Economics.

There were indications in the BLS data that consumer spending is weakening a bit, due to fewer jobs being added in the retail sector. Robert Reich thinks it's worse that, even as the rough pace of 245,000 jobs on averge persists:

[W]hether even that good rate continues depends largely on whether consumer demand can be revived. Spending by American consumers is 70 percent of U.S. economic activity. But so far, spending is anemic.

American consumers have replaced worn-out cars and appliances, but little else. They haven't had the dough. Their wages are still falling, adjusted for inflation. The value of their homes - most consumers' single biggest asset -- continues to drop.

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Corporate profits are up but the money isn't flowing to American workers. The ratio of profits to wages is the highest on record -- since the government began keeping track in 1947. Not only has the median wage continued to drop, adjusted for inflation, but a far smaller share of working-age Americans is now employed (58.6 percent) than was employed five years ago (63.3 percent). Today's employment-to-population ratio isn't much higher than it was at its lowest point last summer, when it dropped to 58.2 percent.

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Montessori: It's good for business

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Amazon CEO Jeff Bezos, a Montessori student as a child, introduces the new Kindle Fire tablet in New York, on September 28, 2011.

An interesting post from Harvard Business Review's blogs, written by Ambiga Dhiraj of Mu Sigma in Chicago. Her company is revamping professional development in the image of...Montessori education. If you don't know about Montessori, here's a good primer. I should confess right up front that my daughter, who's nine, has been in a Montessori elementary school for the last two years, and my 6-year-old son will start at the same school this fall. He also went to Montessori preschool. My wife and I are big fans.

Businesses could be, too. Mu Sigma certainly is:

[I]n 2010 we began to model our development after Montessori schools, whose principals include "an emphasis on independence, freedom within limits, and respect for a child's natural psychological development, as well as technological advancements in society." Since then we've applied these basic tenets to our workforce.

[...]

Prior to the Montessori model, our managers used promotions as carrots. Now they are challenged to motivate employees in other ways — by giving them interesting projects to work on, public praise for their work, and the right guidance and encouragement.

The end effect is that employees develop a longer-term vision for their place at our company — it's the genesis of a career, rather than just an entry-level job. There will inevitably be some turnover, as there is in any firm, but we believe this intrinsic motivation — an employee's love for what she does— is better than money and promotions. We've already seen the results in terms of lower turnover among the entry-level employees who have been through the program. Our retention rates were noticeably higher in 2011 than they were in 2009-2010, and are trending steadily upward.

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Jobs, jobs, jobs: California unemployment rate falls

Unemployment Rate Drops To 8.3 Percent

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George Hernandez looks at job openings at the Foothill Employment and Training Connection on February 3, 2012 in Pasadena, California.

A solid national jobs report this morning — 227,000 new jobs added, unemployment rate steady at 8.3 percent — was followed by a psychologically significant California report, from the state's Employment Development Department. At long last, we're below 11 percent — 10.9 to be exact, for January 2012.

Bear in mind that 10.9 percent is still much higher than the national rate. In Los Angeles, it's even higher, at 11.6 percent (that's the December 2011 number). Still, the overall trend is down. After a rough 2011, we can start to feel better about the economy's momentum.

Importantly, in California we're beginning to see signs of a recovery in the housing sector. Home sales and home buildings appear to be picking up, although it's still unclear whether prices have bottomed. The market continues to be out of whack and could take another four or five years to normalize. But improvements showed up nationally and at the state level, as construction added jobs. The pace is slow, but the direction is positive.

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February jobs report: Just what the doctor ordered

A jobs sign hangs above the entrance to

KAREN BLEIER/AFP/Getty Images

A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC.

A real recovery in the U.S. jobs market is definitely building up a head of steam, but at this point it's still a slow process. The February jobs report is out from the Bureau of Labor Statistics (BLS), and while it's not a home run or even a nice stand-up double, it's still pretty solid: The economy added 227,000 jobs in the shortest month of the year. The unemployment rate remains unchanged at 8.3 percent.

That's the headline number, but what's really encouraging about this report is the revision to the January data. The BLS initially reported 243,000 jobs added, but that number has been revised up to 284,000, which means that on an adjusted basis we're getting closer to the 300-350,000 new-jobs-per-month number that would start to move the national unemployment level much lower. 

In any case, if the trend of upward revisions continues — the past two months have both been revised up the following month — then we can expect February to look better by the time the March data rolls in come April. The bottom line is that the official number came is slightly higher, by around 10,000 jobs, than both the ADP report and the so-called economic "consensus." It also beat bullish predictions that said we'd add less than 200,000 jobs and see the unemployment rate actually rise. 

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Making too much money is the least of UC Davis head's problems

Occupy UC Davis Protests Police Pepper Spray Incident

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UC Davis Chancellor Linda Katehi (C) wipes her eye as she is escorted to a car after speaking to Occupy protestors during a demonstration at the UC Davis campus on November 21, 2011 in Davis, California.

At Slate's Moneybox, Paul Collins does a deep dive into the compensation history of the chancellor at the University of California-Davis. He was evidently prompted by the controversy surrounding current chancellor Linda Katehi and her role in the pepper spray incident that occurred last year, when students were engaged in an Occupy protest.

Katehi makes $400,000, a figure that critics think might be too high for a university president. Collins calls her a "bona fide 1-percenter" and points out that UC Davis chancellor pay has "rocketed upwards in the last two decades" (he has the data to prove it).

All true, but these are the least of Katehi's worries — if she's worried about them at all. And anyone who thinks she's paid to much and that overcompensation should be held against her, especially given the pepper-spray incident...well, those folks need to dig a bit deeper into Katehi's background. They should ask if she should be getting $400,000 to run an institution that's ever likely to experience student protests or have to make quick decisions about the enforcement of order on campus. 

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