GDP growth is solid. Inflation is nil. (In fact, it was -0.1% this month). Interest rates are still at historical lows, despite a series of hikes (yet these hikes are not directly mirrored in all of the lending markets).

It sounds like we should be having a boom, but we’re not. Today’s initial unemployment claims were up again, outpacing the expert’s predictions. And the economy has failed to produce many jobs, with some months better than others, but none stellar. And the stock market is agnostic as well.

There are some other wierd factors, like long term treasuries being lower than shorter term rates. What is the bond market saying about this economy? Is this all caused by the deficit?

What’s going on here?

My lay opinion is that our fiscal realignment in the last 5 years has produced an increasingly rentier based economy, which would at least explain the lagging job growth during a period of GDP growth.

For employers, this means, applying my hypothesis, that this should be a time when all HR decisions are given extra care, because jobs are still hard to come by, and people in desperate straits may look favorably at the chance to recover in a lawsuit.

UCLA forecasters say the economy will cool as the housing boom flattens. The Sacramento Bee reports.

Non-farm payrolls were up only 112,000 in November, after a (revised) 303,000 new jobs were added in October. Unemployment sunk to 5.4%, while the average work week was down 0.1 hours and the average hourly earnings were up 0.1%.

The market probably won’t like this. They were thinking there would be about 200,000 and were about ready to feel relief on lowering oil prices. Probably more of an effect on bonds, which is freaking out right now.

I’m still trying to get ahold of good statistics, but for employers I think this means you will see more post-term charges and complaints. . .

Does Daniel Weintraub read CLEL? His editorial today says …

The biggest problem with our current system is that it injects a third party - the employer or its representative - between patients and doctors and between consumers and their insurance company.

He claims that employer-based health care started as a way around wage-controls during World War II. [Is that really all there was to it?-CLEL]

Weintraub is writing this in the context of urging readers to vote no on Proposition 72, which would enmesh the practice of employer-based health care.

What’s his suggested fix?

We can do this by taking a page from a policy that has proven successful in Switzerland: require every individual to have health insurance that covers at least catastrophic, or unpredictable, costs * * *People who are too poor to afford coverage would continue to get their care through government-subsidized or charity-based health clinics and hospitals. The working poor could get vouchers or refundable tax credits to help them transition to taking charge of their own health insurance purchases.

You’ve got a lot more selling to do, Dan. How would costs be controlled by consumers when they have to have the insurance? Isn’t that a seller’s market? How would you foster competition–FTC action? CLEL agrees that employer-based healthcare should go away; it’s especially onerous on small employers; but for the economy needs healthy workers. Wouldn’t these vouchers end up having a secondary market? How do you have enough competition in the health care market with each provider having a big enough pool? Isn’t it a natural monopoly or oligarchy? We need more answers.

The WSJ (Sub. req’d) has this piece on rising labor costs. Since in real terms, wages have gone up infinitesimally in the last 30 years, it must be the overhead. The piece says its lower productivity and health care costs.

Today’s Slate has a piece on the demise of what the author calls welfare capitalism. Free marketeers have thus far opposed things like socialized welfare–but would it be easier for most employers to not have to deal with this and pensions, etc.?

So, imagine you didn’t have to deal with Workers’ Compensation because, well, they’re covered. Hmmm…

So much in life is what you expect. The same result can be a disappointment to some and a boon to others. Since we’ve had a very bad year in terms of job growth, 144,000 new jobs all of a sudden looks like a big number (and indeed it was over 4 times last month). It’s not. Don’t deceive yourself. It doesn’t even make up for population growth.

CLEL hase been pondering the effect this has on our practice. If anyone has some thoughts, please post a comment. It seems to CLEL, when there is a job shortage, it’s clearly to the advantage of the managment side in a labor negotiation; in “employment” law, however, the less jobs are available, the more likely you are to see the recently departed file for any money available. An unusual contradiction for practitioners of “labor and employment” law.

While the United States as a whole added an anemic 32,000 jobs in July, California actually lost 17,300. The LA Times reports.

California’s employers went into a hiring funk in July, cutting a net 17,300 jobs and raising concerns that the state’s economic recovery has lost steamalong with the nation’s.

On the other hand, some areas of the state showed improving prospects, including surprisingly, the East Bay (The Contra Costa Times reports), and, not surprisingly, the Inland Empire (the Riverside Press reports) and the Central Valley (the Fresno Bee reports).

The Inland Empire added 25,900 jobs in July, almost equal to the entire net growth in the US.

The Sacramento Bee reports that “Workers’ comp savings not yet felt.”

The big news of the day is the latest jobs report showing anemic job growth in July, and revising June and May numbers down as well, the NY Times reports. Only 32,000 jobs were added in July according to the benchmark household survey. 150,000 jobs are required monthly to keep up with population growth. This result reflects about 15% of the results economists were expecting. Read the economists reactions in the WSJ (sub. req’d) [N.B. the more sanguine analysts argue that the actual number of jobs gained was higher, more like half-way in between the Establishment and Household data, but the Household survey continues to be the benchmark.—Ed]

Steven Roach of Morgan Stanley has this summary of the labor market.

We hear repeatedly that the disconnect is all about lags or productivity. I don’t buy it. Instead, I believe that a new force has come into play that is now altering the fundamental relationship between domestic demand and domestic employment in the United States. I call it the global labor arbitrage — the IT-enabled efficiency tactics that allow US companies to substitute high-wage domestic workers with like-quality low-wage foreign workers in goods producing and services-providing functions, alike. The lack of pricing leverage in today’s climate makes this arbitrage an increasingly urgent competitive imperative. In my view, the global labor arbitrage is likely to be an enduring feature of the macro climate — raising the distinct possibility that subpar job creation in the US could well be here to stay for the foreseeable future.

The WSJ (sub. req’d) has this report: CPI up, wages flat; and this piece on legal weblogs. No mention of CL&EL (; Also, Boeing settles a sex-bias suit.

Will Wal-Mart get caught up in this settlement trend? [Not unless it really starts looking bad is my guess.]

The Sacramento Bee has this report on the status of State Fund going forward after the Schwarzenegger work/comp reform

Port business is boom, swelling the ILWU’s ranks. The LA Times reports.

This article in Slate examines the recent minimum wage studies and suggests that earned-income tax credits are a prefereable measure.

According to this article it today’s WSJ (sub. req’d).

It’s otherwise been a slow week.

In an otherwise slow news day in this blawg’s focal area, I found this interesting study:

California cities with best wage growth (nationwide):
(4) Santa Cruz
(6) San Luis Obispo
(10) San Francisco-Oakland.

California cities with worst wage growth:

(4) Stockton
(5) Modesto
(6) San Bernardino
(8) Bakersfield

This is an interesting study, but it would be interesting to see, assuming that inflation is otherwise equal nationwide, whether these wage trends beat the real estate market.

The labor statistics for the month of June were announced this morning, and they were vastly lower than expected by forecasters. The NYT has this report, and the WSJ this (sub. req’d.)

The forecast of the unemployment rate holding steady were correct. Wage growth slowed as well. This figure represents a number lower than the oft cited 150,000 per month required to meet population growth. It is worth pointing out that recent polling shows worker less secure than economists in the ability of the market to create jobs. Score one for groupthink this month.

Job Watch (part of the Economic Policy Institute–a labor-side think tank) has some interesting stats on underemployment. The Heritage Foundation (a conservative think tank) paints a rosier picture:

Some analysts will see these numbers as a disappointment; they’re anything but that. The economy continues to add jobs broadly, and continued growth and positive earnings should see this trend maintained for some time.

All the papers have news on yesterday’s Fed rate hike. The WSJ (subscription req’d.) reports that the Fed did an excellent job of preparing the economy for the hike, so effects should be built-in to any decisions at this point. Economists consider the rates to be approaching a neutral, non-stimulus, non-restraint level sometime in 2005. Labor costs are aceelerating.

The NY Times reports that jobless claims rose by 1,000 last week, and reports an economic forecast of 240,000 new jobs in June (report will be out this week.) Nevertheless, the unemployment rate should remain at 5.6%. Workers’ earnings should rise about 0.3%.

Factory activity cools in June, prices rise in the WSJ (subscription req’d.)

Right now, the indications are that hiring is up, but perceptions haven’t quite caught up with that. People will be working harder, but may be more litigious in times like these.

In tightening economies, employers have historically faced increased exposure for employment litigation and administrative investigations. Layoffs, reductions, and restructuring frequently trigger legal action. Our current economy is no exception.

–The Denver Business Journal, 3/15/02, citing EEOC data.