Payroll employment increases by 321,000 in November; unemployment rate unchanged

Visbek · Dec 9, 2014

WallStreetVixen said:
401(k) plans are given to you by your employer, so what you are saying doesn't make sense.

Do you really need me to spell it out?

With a pension plan, the employer contributes to the plan (and I'm assuming this is included in compensation statistics). Pension funds are obligated to pay out specific amounts over time during collections, and the employer needs to keep the fund solvent -- even if the fund's investments happen to decline. With 401(k)s all of the risks are shifted to the employee. If the bottom falls out of the market, a pension fund is supposed to continue its payouts, while the retiree withdrawing from the 401(k) can not only lose income at that time, but it can also cut future wealth growth.

IIRC large pension funds also made companies targets for hostile takeovers.

Now does it make sense why I said that "the switch from pensions to 401(k)s are almost certainly better for companies, but not for employees" ?

Also, less than 20% of Health Care expenditures are out of pocket. Majority of expenditures are through insurance, and most health care coverage is provided through insurance, whether its private or public, so what you are saying doesn't make sense either.

What I'm saying is that in the past, employers offered better health insurance plans and picked up the whole tab. Over the years, as the costs of those plans increased, employers have shifted more of the costs of those plans to the employees. Is that clearer?

It also makes zero sense to compare CEO compensation to wages of employees. They're not measured or achieved in the same regard.

It makes a great deal of sense to me... and I'm not the only one.

Though I guess I'd agree that CEO compensation surely isn't "measured" by the same standards as most other employees. If a normal employee screws up for a long enough time, they'll get fired, with little or no severance. CEOs today receive enormous compensation regardless of the actual company's performance. They get much more leeway than a typical employee. And of course, they usually receive enormous exit packages when they leave.

I'd say that despite these discrepancies -- or more importantly, because of them -- it makes a lot of sense to compare CEO pay to that of other employees.

WallStreetVixen · Dec 9, 2014

Visbek said:
...or, we can gather statistical information about groups of individuals, in order to find meaningful data about those groups.

We should also note that there actually isn't a lot of economic mobility in the US. The top and bottom in particular are sticky. So while breakdowns by quintile aren't perfect, they certainly do give us meaningful information about what's happening in the labor force and the economy as a whole.

No, it doesn't. All it tells us is that Group A is in one particular place in Year 1 and Group A is in the same group in Year 2. It doesn't tell us anything about the people within those groups. This can only be done by tracking individuals overtime, which several studies have done in regards to income mobility (such as the Federal Reserve Member banks and the BLS). Its all a matter of numbers and statistics.

For example, lets say that you annual measure the height of your children (C1:5'3", C2:3'10" and C3:3'4"). Year 1, their average height is 4'2". Year 2, you have a fourth child, while your other children have grown 4 inches. The addition of the fourth child lowers the average height of your entire offspring, despite the fact that your other children have growth by 4 inches.

This is statistically explained and studied through the lack of income gains in the bottom quintile earners. Poor people earn money. Poor people move higher in income quintiles. New people entering the labour force becomes the new poor.

Yeah... not so much. Again, perceptions of economic mobility are out of whack with reality.

The chart shows that economic mobility is exactly in sync with reality. Only 43% of children raised in bottom income households are likely to remain in such households, while the rest have the ability to move up up in the ranks. This doesn't refute what I say, and it is in line with most studies about income mobility.

Yes, income and wages do change over time; in particular, retirees often lose lots of income. But in general, there isn't nearly as much mobility as people assume.

Keep in mind that the upper limit for the 1st (lowest) quintile is around $20k/yr, and the 2nd quintile is $40k. And that's per household, not per capita. So yeah... The poor tend to stay poor, the rich tend to stay rich, and the middle occasionally gets shuffled around.

This has already been studied extensively. The bottom 50% in 1975 were at the Top 40% 16 years later. Among 25 year olds and older who filed their income tax returns in 1996, by 2005, their incomes rose 91%.

So instead of providing alternative measures, we should just... throw up our hands, and ignore how wages have basically flatlined for the past 40 years? Fascinating.

Wages haven't flatlined in 40 years. You'd see that if you measure wages on their own merits.

OK then. Let's look at wages.

H'm... It doesn't look like compensation have outpaced productivity. Am I missing something?

WallStreetVixen · Dec 9, 2014

Visbek said:
Do you really need me to spell it out?

With a pension plan, the employer contributes to the plan (and I'm assuming this is included in compensation statistics). Pension funds are obligated to pay out specific amounts over time during collections, and the employer needs to keep the fund solvent -- even if the fund's investments happen to decline. With 401(k)s all of the risks are shifted to the employee. If the bottom falls out of the market, a pension fund is supposed to continue its payouts, while the retiree withdrawing from the 401(k) can not only lose income at that time, but it can also cut future wealth growth.

IIRC large pension funds also made companies targets for hostile takeovers.

Now does it make sense why I said that "the switch from pensions to 401(k)s are almost certainly better for companies, but not for employees" ?

You're not saying much of anything. You have complete 100% freedom with a 401k plan, as opposed to a regular pension, which is not managed by you or your employer, but an investment company. Is there significantly more risk in 401k? Sure, however, the rewards are significantly greater. There is a lot of freedom involved with a 401k, which allows for greater flexibility and transparency when it comes to your financial independence. 401k plans posted higher results than both the stylised final average deferred-plans and the stylized cash balance plan.

I personally would rather have a 401k (considering that I'm in the finance industry and all) over a pension.

What I'm saying is that in the past, employers offered better health insurance plans and picked up the whole tab. Over the years, as the costs of those plans increased, employers have shifted more of the costs of those plans to the employees. Is that clearer?

No, it isn't clear, because it isn't clear where this basis of this statement lies. Out of pocket cost also includes copayments and/or deductibles. This hasn't really increased as a percentage of health care expenditures either.

It makes a great deal of sense to me... and I'm not the only one.

Though I guess I'd agree that CEO compensation surely isn't "measured" by the same standards as most other employees. If a normal employee screws up for a long enough time, they'll get fired, with little or no severance. CEOs today receive enormous compensation regardless of the actual company's performance. They get much more leeway than a typical employee. And of course, they usually receive enormous exit packages when they leave.

I'd say that despite these discrepancies -- or more importantly, because of them -- it makes a lot of sense to compare CEO pay to that of other employees.

This is simply false. CEO compensation is determined strictly on performance, and usually, the benchmark is company performance. Because of this, CEO compensation is highly volatile. Compensation can increase anywhere from 31% to - 41%. If you, as an employee, experienced a 41% drop in income, I don't think you would be too happy about that. Then again, most financial savvy people don't compare employee task and duties to the CEO. It's nonsensical.

Kushinator · Dec 9, 2014

WallStreetVixen said:
That graph is outdated by a year. Sometimes its just better to get the information from the horse's mouth.

$1,780.2 W&S Supplements / $14,801.2 GDI = 12% of GDI

GDI = GDP, not gross personal income. But i digress, the information was a tad outdated.

Employees have received more income overtime.

Not as a percentage of personal income:

It makes sense to compare the growth of wages as a percentage of personal income, relative to other forms of income.

Do you believe government transfers make up the slack?

Why do you think it makes sense to compare wages and salaries to GDP? What exactly would that show? They are virtually the same, in a textbook sense, anyway.

Personal income is not the same as GDP. None the less, it is a simple (yet certainly not complete) method in identifying how much compensation goes to labor.

They save more of their income and have higher expenditures than lower income earners do. They spend money all the same.

They have a lower marginal propensity to consume domestic goods.

Kushinator · Dec 9, 2014

WallStreetVixen said:
Unit Labour Cost are already indexed for inflation, so your graph is inaccurate.

No they are not.

Kushinator · Dec 9, 2014

WallStreetVixen said:
CEO compensation is determined strictly on performance, and usually, the benchmark is company performance.

This is the claim.

This is reality.

WallStreetVixen · Dec 9, 2014

Kushinator said:
No they are not.

All that shows is how Unit Labor Cost are measured. While we do deflate Real Output per Hour, we don't deflate ULC. The whole purpose of measuring ULC determining the underlying rate of inflation for the economy in the medium term. Its intended to track inflation. This can't be done if you deflate ULC with the CPI-U

WallStreetVixen · Dec 9, 2014

Kushinator said:
This is the claim.

This is reality.

Who ever wrote that has obviously never looked at a DEF 14A form issued by any corporation to the SEC. Board of Directors don't measure stock returns in determining performance (maybe. If there is a BOD that measures stock returns, I haven't seen it). There are actual benchmarked used in determining that.

Aside from that, the study is nonsense, with clear selection bias. It's only looking at 200 CEO/Corporations, not even the entire S&P or market overall. If anyone really wanted to, they could to go the Edgar SEC database, sure for any business, look up their proxy statement, and look at exactly how their executives were compensated.

WallStreetVixen · Dec 9, 2014

Kushinator said:
Do you believe government transfers make up the slack?

Yes. If incomes from the top are being transferred to the people on the bottom, their incomes will rise while the incomes at the bottom will fall.

Personal income is not the same as GDP. None the less, it is a simple (yet certainly not complete) method in identifying how much compensation goes to labor.

The workforce has many different forms of compensation. It cannot be captured with only wages and salaries. Your employer can either give you $10,000 in extra annual taxable income, or $10,000 in untaxed health insurance funds It works out to about the same.

They have a lower marginal propensity to consume domestic goods.

That's not necessarily a bad thing.

Kushinator · Dec 9, 2014

WallStreetVixen said:
All that shows is how Unit Labor Cost are measured. While we do deflate Real Output per Hour, we don't deflate ULC. The whole purpose of measuring ULC determining the underlying rate of inflation for the economy in the medium term. Its intended to track inflation. This can't be done if you deflate ULC with the CPI-U

You stated that ULC's are already indexed for inflation. This is simply not true.

Visbek · Dec 9, 2014

WallStreetVixen said:
No, it doesn't. All it tells us is that Group A is in one particular place in Year 1 and Group A is in the same group in Year 2....etc

And yet, for some reason you didn't bother to link to the relevant studies. Somehow, I doubt their conclusions are significantly different than what I'm asserting here. Guess I'll look for myself.

The chart shows that economic mobility is exactly in sync with reality. Only 43% of children raised in bottom income households are likely to remain in such households....

I suggest you re-examine the charts. It suggests that 68% of people born in the bottom quintile ($20k/household/yr) either stay in that quintile, or do not make it past the 2nd quintile ($40k/household/yr).

If our economy exhibited perfect equality (which, realistically, no one expects), then everyone born into any quintile would have an equal chance of ending up in any other quintile.

Further, I was pointing out that perceptions are completely out of whack with actual current rates of income inequality:

140926_$BOX_PercentWealthOwned.png.CROP.original-original.png

This has already been studied extensively. The bottom 50% in 1975 were at the Top 40% 16 years later. Among 25 year olds and older who filed their income tax returns in 1996, by 2005, their incomes rose 91%.

Link please?

Wages haven't flatlined in 40 years. You'd see that if you measure wages on their own merits.

Oh, I see what I've missed. A misleading statistic.

It looks a little bit different when adjusted for inflation....

Kushinator · Dec 9, 2014

WallStreetVixen said:
Who ever wrote that has obviously never looked at a DEF 14A form issued by any corporation to the SEC. Board of Directors don't measure stock returns in determining performance (maybe. If there is a BOD that measures stock returns, I haven't seen it). There are actual benchmarked used in determining that.

It was an article about the study put forth by Equilar.

Here is the link to the actual report.

There is a ton of evidence that supports the concept that CEO pay is certainly not correlated to performance.

WallStreetVixen · Dec 9, 2014

Kushinator said:
You stated that ULC's are already indexed for inflation. This is simply not true.

Unit Labour Cost are indexed for a particular year to show the growth in relative terms. It keeps the growth of wages/productivity in perspective to inflation.

iguanaman · Dec 9, 2014

WallStreetVixen said:
Yes. If incomes from the top are being transferred to the people on the bottom, their incomes will rise while the incomes at the bottom will fall.

The workforce has many different forms of compensation. It cannot be captured with only wages and salaries. Your employer can either give you $10,000 in extra annual taxable income, or $10,000 in untaxed health insurance funds It works out to about the same.

That's not necessarily a bad thing.

Except when we have an economy like ours where 70% of GDP is consumer spending. That's why we must make the tax rates more progressive. This mess all started with the drastic tax cuts for the top brackets. CEO's would not be taking those huge salaries if most of it was going to the IRS.

WallStreetVixen · Dec 9, 2014

Visbek said:
And yet, for some reason you didn't bother to link to the relevant studies. Somehow, I doubt their conclusions are significantly different than what I'm asserting here. Guess I'll look for myself.

My research generally speaks for itself.

I suggest you re-examine the charts. It suggests that 68% of people born in the bottom quintile ($20k/household/yr) either stay in that quintile, or do not make it past the 2nd quintile ($40k/household/yr).

If our economy exhibited perfect equality (which, realistically, no one expects), then everyone born into any quintile would have an equal chance of ending up in any other quintile.

You're looking at your own information wrong.

Income earners are categorized from Red - Green, with red being the lowest income earners and green being the highest. Left to right from lowest income group to highest. 48% of people in the lowest income group are likely to stay there, if they were born within that income group. 27% of people born in the lowest income group are likely to move up in the second quintile, and so on and so forth.

Again, there is only limited income mobility for 48% of people born in the bottom income quintile.

Further, I was pointing out that perceptions are completely out of whack with actual current rates of income inequality:

So?

Link please?

http://www.treasury.gov/resource-center/tax-policy/Documents/incomemobilitystudy03-08revise.pdf

https://www.dallasfed.org/assets/documents/fed/annual/1999/ar95.pdf

Oh, I see what I've missed. A misleading statistic. It looks a little bit different when adjusted for inflation....

Unit Labor cost is intended to track inflation. You don't adjust unit labour cost for inflation. That is statistically invalid. You should really reframe from looking up charts on Google, especially if you don't have a clue of the validity of your source.

DA60 · Dec 9, 2014

A few tidbits from the BLS report (household survey):

In addition to only 4,000 more Americans gaining employment AND 150,000 fewer of them working full time, the following groups had fewer people employed last month;

- teenagers (22k)
- 20-24 year olds (147k)
- Men, all ages (268k)
- Married men and women (spouse present) (169k)

Plus - 735,000(!!!) less Americans were employed full time (NOT seasonally adjusted)

Table A-9. Selected employment indicators

Oh yeah, this was a fantastic report! :roll:

Read past the headlines America.

Btw, once again, I am neither dem nor rep.

pinqy · Dec 9, 2014

DA60 said:
A few tidbits from the BLS report (household survey):

In addition to only 4,000 more Americans gaining employment AND 150,000 fewer of them working full time, the following groups had fewer people employed last month;

- teenagers (22k)
- 20-24 year olds (147k)
- Men, all ages (268k)
- Married men and women (spouse present) (169k)

Plus - 735,000(!!!) less Americans were employed full time (NOT seasonally adjusted)

Table A-9. Selected employment indicators

Oh yeah, this was a fantastic report! :roll:

Read past the headlines America.

Btw, once again, I am neither dem nor rep.

And what are the margins of error for those changes? http://www.bls.gov/cps/eetech_methods.pdf
Month to month level changes from the household survey are almost never statistically significant..you really have to look at the longer trends.

DA60 · Dec 9, 2014

pinqy said:
And what are the margins of error for those changes? http://www.bls.gov/cps/eetech_methods.pdf
Month to month level changes from the household survey are almost never statistically significant..you really have to look at the longer trends.

My post was nothing to do with 'trends'...it was strictly to do with the BLS's report.

Did I post any statistic that is not correct according to the BLS?

Yes or no, please?

WallStreetVixen · Dec 9, 2014

Kushinator said:
It was an article about the study put forth by Equilar.

Here is the link to the actual report.

There is a ton of evidence that supports the concept that CEO pay is certainly not correlated to performance.

Well, I briefly read the study (or the relevant parts, anyway). I don't really see much of that evidence. For the most part, you can see that performance-based stock compensation has increased 7.2% from 2009 to 2013 (page 13). It also shows that performance awards are the most prevalent form of compensation (page 21). I haven't seen anything regarding CEO underperforming or performing well for these awards.

Again, what the article (not the study) does is evaluate CEO performance by looking at their compensation relative to stock performance. This is one of the most popular ways of determining whether or not a CEO is overpaid, which only makes sense if you are an investor. Stock prices are a reflection of future earnings. When the company makes more revenue, stock prices increase and CEO compensation must increase as an inevitable result. As an investor, the CEO's must have investors best interest at heart and make sure shareholder's equity is preserved. However, when Board of Directors determine CEO compensation, it is determined on a wide range of different factors, and each company is different. I don't see any factors determining an increase in CEO performance compensation or time based stock (or the decline in options).

Visbek · Dec 9, 2014

WallStreetVixen said:
You're not saying much of anything.

I'm trying to illustrate how 401(k)s are great for companies, but are not a consistent win for employees. It shifts all the risk (and the fees...) to the employees, and most of the management infrastructure to a 3rd party. That's certainly saying something.

You have complete 100% freedom with a 401k plan....

Yes, it's a good thing to give the average investor "100% freedom" over their retirement assets.

Is there significantly more risk in 401k? Sure, however, the rewards are significantly greater.

Are they? A few funds really smack it out of the park with 11-15% returns, but most 401(k) long-term returns are apparently in the 5-6% range. Freedom!

I'd be willing to change my mind if you posted actual statistics that show 401(k) recipients as better off than pension recipients. Bare assertions are... less convincing. And no, we can't look exclusively at returns, we also have to look at total withdrawals. Remember, retirees are required to take minimum distributions, and have to draw down a bigger percentage of their total 401(k) in a downturn. Many pension funds do not change their payouts based on market conditions or the holdings of the fund. All of this reduces those Freedom Rewards.

No, it isn't clear, because it isn't clear where this basis of this statement lies. Out of pocket cost also includes copayments and/or deductibles. This hasn't really increased as a percentage of health care expenditures either.

*sigh* let's try again

As I clarified, I'm not talking about "total health care costs." I'm talking about "health insurance as a part of employee compensation." (Employers do not, and rarely did, pay for actual health care costs, so why would we discuss that in the first place?) As those health insurance costs have risen, companies have passed on more of that cost to employees. NOW do you understand what I'm referring to?

This is simply false. CEO compensation is determined strictly on performance...

lol, if you say so

The Highest-Paid CEOs Are The Worst Performers, New Study Says - Forbes
Blast from the past! https://hbr.org/1990/05/ceo-incentives-its-not-how-much-you-pay-but-how
http://www.nytimes.com/2014/04/13/business/executive-pay-invasion-of-the-supersalaries.html
http://www.nytimes.com/2014/04/13/b...rmance-it-depends-on-the-measuring-stick.html

Compensation can increase anywhere from 31% to - 41%. If you, as an employee, experienced a 41% drop in income, I don't think you would be too happy about that.

I assume you're referring to Jeff Smisek in 2012? His pay shrank by 41%... to $7.9 million. In a year when United Airlines lost $723 million. His base pay (just shy of $1 million) didn't change.

United also cut 1300 jobs early in 2012, and another 600 in January 2013. His bonuses could have kept 92 employees, with an average pay of $75k, on the job rolls.

Should we even hazard a guess how much he'd collect if he was fired? Are exit packages also an example of "pay for performance?"

And of course, even with his "pay cut," not everyone thinks he was actually compensated for that year's performance:
http://www.chicagobusiness.com/arti...967/did-uniteds-smisek-really-earn-that-bonus

Great example. :mrgreen:

Then again, most financial savvy people don't compare employee task and duties to the CEO. It's nonsensical.

We're not talking about "tasks and duties." We're talking about the ratio of compensation for employees to the CEO. And yes, it does make sense to note how significantly that ratio has changed, because it's a major component of income inequality, and why the average worker's pay has flatlined relative to inflation over the past several decades.

Visbek · Dec 9, 2014

WallStreetVixen said:
My research generally speaks for itself.

Erm.... You haven't posted any research. You certainly haven't linked to studies that track income or wages over a lifetime, as I requested. All you've posted are a couple of FRED graphs.

Income earners are categorized from Red - Green, with red being the lowest income earners and green being the highest. Left to right from lowest income group to highest. 48% of people in the lowest income group are likely to stay there, if they were born within that income group. 27% of people born in the lowest income group are likely to move up in the second quintile, and so on and so forth.

Yes. That's why I said that "68% of people born in the bottom quintile ($20k/household/yr) either stay in that quintile, or do not make it past the 2nd quintile ($40k/household/yr)." (emphasis added.)

We also know that average income for the quintiles aren't changing significantly -- except, again, for the top 20%, and most of that is because of the top 0.01-5%:

Yes, these charts aren't a perfect proxy for wages, since the top also gets income from assets and rent-seeking activities. Which, uh, poor people can't engage in as they don't have access to that kind of capital. I.e. we are mostly seeing wages as the income source for at least the bottom 3 quintiles, and they've barely budged since the 1960s and 1970s. How are these poor people getting richer again?

Unit Labor cost is intended to track inflation. You don't adjust unit labour cost for inflation. That is statistically invalid. You should really reframe from looking up charts on Google, especially if you don't have a clue of the validity of your source.

"Refrain"

As best I can tell, the BLS's calculations for ULC don't use indexed wages. It uses C, rather than RC. Ch. 10, Calculation Procedures, BLS Handbook of Methods

In addition, the annual changes in ULC do not routinely beat the CPIX -- as we'd need to see, if your ULC chart was in real dollars rather than nominal:

There's also a ton of data (including charts I've already posted) that indicates both increases in productivity, and flat income (which in many cases is a valid proxy for wages) for the overwhelming majority of households. I could literally be here all day citing it. Kinda looks like you're going to need more than one FRED graph to overwhelm that.

pinqy · Dec 9, 2014

DA60 said:
My post was nothing to do with 'trends'...

I know.. That was my onjection

it was strictly to do with the BLS's report.

More to the point, it was to try to cast doubt on the jobs part of the report at least that's the impression I got.

Did I post any statistic that is not correct according to the BLS?

Yes or no, please?

The question is what is the accuracy of those published numbers, using just the rough standard error, the margin of error for +4,000 employed is +/- 436,000
Do you really think that invalidates the +321,000 jobs with a margin of error of +/- 94,577?

DA60 · Dec 9, 2014

pinqy said:
I know.. That was my onjection

More to the point, it was to try to cast doubt on the jobs part of the report at least that's the impression I got.

The question is what is the accuracy of those published numbers, using just the rough standard error, the margin of error for +4,000 employed is +/- 436,000
Do you really think that invalidates the +321,000 jobs with a margin of error of +/- 94,577?

I will take that as a 'no'.

If you want to play 'I think you posted that for such-and-such reason', please find someone else to play with.

I typed my post to introduce stats to the discussion...nothing else.

Good day.

WallStreetVixen · Dec 9, 2014

Visbek said:
Erm.... You haven't posted any research. You certainly haven't linked to studies that track income or wages over a lifetime, as I requested. All you've posted are a couple of FRED graphs.

What exactly do you call what I did here?

WallStreetVixen said:
http://www.treasury.gov/resource-center/tax-policy/Documents/incomemobilitystudy03-08revise.pdf

https://www.dallasfed.org/assets/documents/fed/annual/1999/ar95.pdf

Yes. That's why I said that "68% of people born in the bottom quintile ($20k/household/yr) either stay in that quintile, or do not make it past the 2nd quintile ($40k/household/yr)." (emphasis added.)

No, 68% move at the second quintile or past it. Only 48% remain in the same quintile. How did you manage to confuse the chart and a basic explanation?

We also know that average income for the quintiles aren't changing significantly -- except, again, for the top 20%, and most of that is because of the top 0.01-5%:

Yes, these charts aren't a perfect proxy for wages, since the top also gets income from assets and rent-seeking activities. Which, uh, poor people can't engage in as they don't have access to that kind of capital. I.e. we are mostly seeing wages as the income source for at least the bottom 3 quintiles, and they've barely budged since the 1960s and 1970s. How are these poor people getting richer again?

I've already explained, snapshot data doesn't show income growth of people overtime. They only show the status of people in one particular group in year 1, and the status of the same group in year 2.

You need to track flesh and blood individuals to determine income growth. I've already presented two different studies showing this. One from the Boston Federal Reserve and the other is from the US Treasury, which you have decided not to address.

In addition, the annual changes in ULC do not routinely beat the CPIX -- as we'd need to see, if your ULC chart was in real dollars rather than nominal:

Unit Labor Cost doesn't need to beat the CPI. Unit Labour Cost already TRACKS the CPI. You're still not getting this, are you? Actually, there is a 0.82 correlation between the CPI and Unit Labour Cost, according to Brian Belski, chief investment strategist for Oppenheimer & Co. A rise in an economy’s unit labour costs represents an increased reward for labour’s contribution to output. However, a rise in labour costs higher than the rise in labour productivity may be a threat to an economy's cost competitiveness, in other words, too much inflation.

Also, I don't understand why you look up these charts without taking the time to understand what it represents. If you look at your own chart, Unit Labour Cost moves almost in perfect sync with one another. This is because there is a very strong correlation between unit labour cost and inflation.

There's also a ton of data (including charts I've already posted) that indicates both increases in productivity, and flat income (which in many cases is a valid proxy for wages) for the overwhelming majority of households. I could literally be here all day citing it. Kinda looks like you're going to need more than one FRED graph to overwhelm that.

The ULC chart is all I need. Unit Labour Cost are Wags / Productivity. If Unit Labour Cost increase, that means wages are outpacing productivity. If labour cost declines, then productivity takes precedent. It's really that basic, and it is undebatable for the most part. The only information you have cited so far are mostly from individuals who really don't understand the issue. And just for your further understanding, Unit Labour Cost are index, because that is how the growth is measured.

Unit Labour Cost are indexed to 2009 changes. Q1 2009 = 100, while Q3 2014 = 103.8. This means that Unit Labour Cost has grown 3.8% within the past 6 years.

BringIt · Dec 9, 2014

I’m not sure if you understand what author DANIEL AMERMAN CFA was trying to convey in his article dated 13 March 2012.

Let’s start here…
First of all you are looking at the wrong data set.

pinqy said:
How is this a long history of remaining almost static?

This is the chart the author was referencing…

In addition, this chart shows the mutual relevance he was referring to…

pinqy said:
The UE rate is Unemployed/labor force and the labor force participation rate is Labor force / population. The BLS analyst can't arbitrarily assign categories..its' all based on what the people say.

Yes & No… While, like you point out, the UE rate is Unemployed/labor force and the labor force participation rate is Labor force / population. But it doesn’t end there. As the author pointed out, the population is being decreased because, as the chart above demonstrates, more and more people are now being classified as Discouraged Workers. And, as you know, those who have no job and are classed as marginally attached or Discouraged Workers—are by definition — counted as “not in the labor force”.

pinqy said:
How? If someone says they were looking for work, BLS can't just decide to classify him as discouraged. You'll have to walk me through the steps you think happen, because right now, you're not making any sense.

I’ll start with a question: If, during the survey call, an unemployed worker states that he hasn’t looked for a job in the last 4 weeks because he believes that there is no job available to them in their line of work, where should this person be placed?

Previously, this person would would be classified as unemployed. Under the current rules…

While still unemployed and in need of work, under the current survey rules, this person would be classed as a Discouraged Worker. He (along with everyone else considered Not In The Labor Force) is then removed from the list of Unemployed. Since he is not considered Unemployed and he is not counted as Employed then he is, by default, removed from the Labor Force Participation calculation.

In effect, he vanishes from the calculation and the Unemployment great drops by one person.
(See… Who is not in the labor force? [http://www.bls.gov/cps/cps_htgm.htm])

Payroll employment increases by 321,000 in November; unemployment rate unchanged

Stuck In The Circle

Well-known member

Well-known member

I'm not-low all the time

I'm not-low all the time

I'm not-low all the time

Well-known member

Well-known member

Well-known member

I'm not-low all the time

Stuck In The Circle

I'm not-low all the time

Well-known member

Well-known member

Well-known member

Stuck In The Circle

Stuck In The Circle

Well-known member

Member