January 19, 2012

Romney says he created 100,000 jobs. But that is the Gross number. What you need is the NET number.

A current topic of discussion is how many jobs did Mitt Romney, through Bain Capital, actually create. Romney has cited Sports Authority and Staples as shining examples of job creation. (How Many Jobs did Romney Create at Bain ).

But just looking at the number of jobs created (in various cited companies) does not get you the right number. The only meaningful number is the NET Jobs Created. Now, if Staples or Sports Authority added x number of jobs their success and growth came at the expense of their competitors. While they added jobs, their competitors lost jobs (all of them if they went out of business).

If the Sports Authority and Staples were so successful it's because they beat out their competition. And this most likely means they were offering products of comparable quality at a better price (there is not that much of a service component to sporting goods retailing). If people were buying product at a lesser price from SA & Staples then that means they have some money left over to buy other things ... (more i-Pods, pizzas, or whatever). This increased purchasing power would then lead to additional sales and this could result in increased employment. But the additional employment would be based upon additional demand produced from the money consumers saved buying items at the SA & Staples.

So, if SA and Staples saved buyers, let's say 10% on their purchases, then you could make an estimate of the increased employment (this would require more data to make real estimate - but for purposes of making a point I will use a very rough guesstimate) based upon the amount of money saved by the SA & Stapes customers (and therefor available to make other purchases). {This of course, is complicated by which sector the saved money was spent in (retail food, electronics, etc).} I will use a great simplification of assuming similar levels of staffing relative to sales revenues for SA & Staples and for the companies that gained the sales from the savings enjoyed by SA & Staples customers.

Staples had about 89,000 employees at the end of 2011. Sports authority is now a private company but when they were incorporated the available information showed they employed about 11,000. So let's say 100,000 employees total for both SA & Staples. If these two companies were able to sell product for 10% less than competitors - let's make a guesstimate that the money saved provided additional sales which lead to the hiring of an additional 10,000 employees at various companies where the saved money was spent (this assumes a similar number of employees to retail sales revenues to that for SA & Staples - big assumption but this is just to make a point.).

So the NET increase in Employment was not 100,000 but a percentage of that number, something like 10,000 (assuming SA & Staples saved their customers 10% on their purchases).

But it's not that simple! If SA & Staples beat out competitors by underpricing them 10% - it's quite possible that that greater efficiency achieved by SA & Staples, would have been reflected in fewer employeers for dollars of sales for SA & Staples than for their competitors. That is, their competitors may have employed more people per dollar of sales than SA & Staples. So it's possible the jobs lost as competitors down-sized or were driven out of business was GREATER than the jobs GAINED at SA and Staples. If the competitors who lost out to SA & Staples were 10% LESS efficient than SA & Staples then the NET jobs gained could have been ZERO - because the competitors (if they were driven out of business) would have lost 10% more jobs than SA and Staples created. I am assuming of course, that the difference in total efficiency was also reflected, to the same degreee, in different staffing levels in the competitors and SA & Staples.

So what really produces increased jobs/employment? Well, it's increased total Demand for Goods and Services which leads to increased sales and the hiring of more people. Efficiency improvement CAN lead to jobs gained but it's not as simple as just counting the additional jobs gained at the winning employer. You have to look at the nubmer of jobs lost at the competitor employers. And taking into consideration the competitors who lost out to the more efficient winning employers, the number of jobs lost at the losing companies would reduce the number of jobs gained at the winning employers, perhaps for a NET jobs gained of ZERO.

If you want to create jobs growth, increase demand for goods and services. And the best way to do that is to see that the largest part of the population isn't losing ground in terms of earnings. During the Bush administration median income in the U.S. went down about 4%. This does not (and did not) bode well for aggregate demand for goods and services and thereby jobs growth. during the Bush regime, the net job growth was zero. (Aughts were a lost decade for U.S. Economy, Workers

January 15, 2012

Five Facts And One Big Lie: A Closer Look At The Oil Lobby's Keystone XL Jobs Claims

Five Facts And One Big Lie: A Closer Look At The Oil Lobby's Keystone XL Jobs Claims

Independent Assessment Found That KXL Jobs Would Create As Few As 50 Permanent Jobs

Cornell University Global Labor Institute: Based On TransCanada's Numbers, "The Project Will Create No More Than 2,500-4,600 Temporary Direct Construction Jobs." From Cornell University Global Labor Institute's report: "A calculation of the direct jobs that might be created by KXL can begin with an examination of the jobs on-site to build and inspect the pipeline. The project will create no more than 2,500-4,650 temporary direct construction jobs for two years, according to TransCanada's own data supplied to the State Department." [Cornell University Global Labor Institute, September 2011]

Cornell: "Almost All" KXL Jobs Will Be Temporary - Permanent U.S. Jobs Could Be "As Few As 50." From Cornell University Global Labor Institute's report: "t is also important to consider that almost all of the jobs (direct, indirect and induced) associated with Keystone XL will, of course, also be temporary. The operating costs for KXL are very minimal, and based on the figures provided by TransCanada for the Canadian section of the pipeline, the new permanent US pipeline jobs in the US number as few as 50. The other operating expenditures (for materials, supplies, services, electric power, property taxes, etc.) would comprise the bulk of operating expenses and would also have some job impacts. So considering a broad range of spin-offs, operating expenditures would have job impacts in the order of around 1,000 per year." [Cornell University Global Labor Institute, September 2011, internal citations removed]

ThinkProgress Graphic Compares TransCanada's Stats With Independent Figures: The following chart from ThinkProgress compares the high-end estimate of Cornell Global Labor Institute's report and the TransCanada-commissioned Perryman Group's estimate:




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January 12, 2012

One Big Advantage Republican Pres Candidate will have over Obama (the GOP's Catch-22)

The Republican candidate for Pres. can point out that he won't have Republicans fighting everything he tries to do. Not that any Republican candidate will do anything constructive to help the country (their objective is to set up a Corporate Feudalist system), but this is the Republican promise (i.e. threat) of the Politics of Destruction: Don't elect us and we will do everything we can to keep your President from getting ANYTHING done (look at our record!). They will fight to continue this Republican Dystopia. Elect us and we won't fight passage of every constructive bill presented to Congress (of course, with them in control only senseless, destructive bills would be offered, so it's the worst kind of Catch-22 we could be confronted with).