employment | Jobenomics

Jobenomics U.S. Unemployment Analysis: Q2 2016

Jobenomics U.S. Unemployment Analysis: Q2 2016

By: Chuck Vollmer

Contact information: [email protected]

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Jobenomics U.S. Unemployment Analysis - Q2 2016 - 6 August 2016

6 August 2016

Jobenomics reports on U.S. unemployment and employment size, characteristics and trends. This Analysis focuses on how the U.S. government reports on unemployment and income statistics, why Americans who can work chose not to work, and the impact of 109.8 million non-working able-bodied citizens are having on the U.S. labor force and economy. The Jobenomics Employment Analysis focuses on the U.S. labor force, business and job creation, and transformative trends—with emphasis on 60 million workers in the rapidly growing contingent workforce.

Executive Summary

According to the U.S. Bureau of Labor Statistics (BLS), the U.S. labor force has three statistical categories: Employed, Unemployed and Not-in-Labor-Force. Understanding the dynamics between these categories is required to understand the American labor force and ultimately the U.S. economy.

From an unemployment perspective, policy-makers, decision-leaders and the American public must address three major trends: (1) growing voluntary workforce departures, (2) contingent workforce expansion, and (3) below average wage earner issues that are becoming more pervasive.

Sooner or later, the American public will figure out that it is theoretically possible for the United States to have a zero rate of unemployment while simultaneously having zero people employed in the labor force. The reason for this disquieting statement involves how government measures unemployment. To be classified as unemployed, one must be looking for work. Able-bodied Americans who quit looking and voluntarily depart the workforce are classified in a nebulous and obscure Not-in-Labor-Force category that few people comprehend.

Six unemployment categories (U1 through U6) are reported monthly by the BLS. Each category requires that an individual must be actively looking for work. These categories are calculated as a percent of the Civilian Labor Force (Employed + Unemployed). The BLS also calculates the number of able-bodied adults who can work, but are not looking for work, in a category entitled Not-in-Labor-Force, which is not part of the Civilian Labor Force (159 million), but part of the larger Civilian Noninstitutional Population (254 million), which is a subset of the entire U.S. population (324 million).

The latest BLS Employment Situation Summary[1] reports that 122.1 million Employed Americans work in the private sector[2] versus 109.8 million citizens who are Unemployed (U6, defined as total unemployed and underemployed people who are looking for work) and Not-in-Labor-Force (NiLF, defined as able-bodied adults who are capable of working but not looking for work for a variety of reasons). From 1 January 2000 to 1 July 2016, the working population (Private Sector Employed) increased by 11% compared to a 40% rise in the non-working population (U6/NiLF). The non-working population briefly exceeded the working population during the 2007-2009 Recession and is likely to outnumber the working population by 2024 if current trends exist, or earlier if an economic downturn occurs.

The U6 population includes the long-term unemployed (U1), job losers and temporary workers (U2), total unemployed workers (U3), discouraged workers (U4), marginally attached workers (U5) and underemployed workers who work part-time because they can’t find a full-time job. It is important to remember that a person must be actively looking for work to be counted as unemployed in any of the six BLS unemployment categories. In January 2000, the U6 population was 9,953,000. The height of the Great Recession, U6 peaked at 26,440,000 April 2010, an increase of 166% since the turn of the Century. Since peak through Q2 2016, the U6 dropped by 11.2 million people to 15,252,000 today. Despite all the political fanfare, 15,252,000 unemployed, underemployed and marginally-attached citizens still represent 53% more people out of work than existed 16 years ago.

Able-bodied adults who are neither employed nor unemployed are not in the labor force. Those who have no job and are no longer looking for a job are accounted by the BLS in the Not-in-Labor-Force category. From 2000 through Q2 2016, the Not-in-Labor-Force cadre grew from 68,655,000 to 94,517,000, an increase of 26 million citizens who more often than not are dependent on public/familial assistance.

Since the post-recession April 2010 U6 peak in Q2 2010, the Not-in-Labor-Force cadre grew by 11.8 million, which offset the 11.2 million people that were no longer part of the U6 population. Today, the Not-in-Labor-Force exceeds the U6 Unemployed cadre by 6-times (94,517,000 versus 15,252,480) and 12-times the number of people enrolled in the U3 Unemployment category that is generally referred to as the “officially unemployed”. This great disparity is rarely addressed by policy-makers, analyzed by decision-makers or mentioned by the media’s talking-heads, all of whom focus almost entirely on the “Official U3 Unemployment Rate” that is now at a post-recession low of 4.9%.

The ability to work should be the determining factor for unemployment as opposed to whether or not a person is looking for work. Jobenomics contends that all able-bodied Americans who can work, regardless if they are looking or not, should be considered “functionally” unemployed. Functional is defined as capable of working. An able-bodied adult who is capable of working but chooses not to work should be considered unemployed for the same reason that “discouraged”, “marginally attached” and “part-time workers for economic reasons” are included in the U4, U5 and U6 Unemployment categories.

This chart shows U3, U6, NiLF and the Jobenomics Functionally Unemployed numbers in relation to the Civilian Labor Force. The 4.9% U3 and 9.6% U6 are percentages of the Civilian Labor Force that consist of Employed and Unemployed workers who are currently employed or looking for work.

Hypothetically, if compared to the Civil Labor Force, the Not-in-Labor-Force cadre would equate to 59.5%, and the Jobenomics Functionally Unemployed (NiLF & U6) would be 69.1%, which gives one a sense of how large a challenge that the Not-in-Labor-Force cadre presents to the U.S. labor force and the American economy.

In order to achieve a sustainable economy and labor force, U.S. policy-makers and decision-leaders must shift their attention from an U3/U6 unemployment focus to understanding the reasons that able-bodied Americans who are capable of working are no longer looking for work and joining the ranks of those no longer in the U.S. labor force. When as many people drop out of the labor force as enter it, the U.S. economy cannot grow as it should.

Most economists believe that economic growth depends on job and GDP growth. The ideal rate for U.S. GDP growth is 2% to 3%. For the United States, a mature economy, sustained GDP growth significantly over 3% tends to led to overheating and bubbles. Anything below 2% is considered sclerotic growth and makes the economy vulnerable to financial downturns. During the post-WWII recovery, U.S. GDP grew at an average rate of 3.5% which created tens of millions of new jobs each decade. Since 2000, U.S. GDP averaged 1.76%. During the post-recession recovery period to today, U.S. GDP averaged 2.0% but is now slowing significantly. In Q1 2016, U.S. GDP grew by an abysmal 0.8%. Q2 2016 is estimated to be not much better at 1.2%. Consequently, the combined GDP rate for 2016 is only 1.0%—an alarmingly low rate of growth.[3]

As far as the future, many economists feel that a recession (two quarters below 0% GDP growth) is likely. The United States averages 3 financial downturns and 1.7 recessions per decade over the last 7 decades. This decade (2010s) has been recession-free largely due to government deficit spending, increasing money supply, low interest rates, stimulus packages, bailouts, buyouts and foreign investment. Now that the era of easy money is coming to an end, an anemic U.S. economy will have to operate under its own steam.

The period of frail GDP growth from 2000, has dramatically impacted the American middle-class and the U.S. labor force that gained 13,395,000 workers but lost 25,862,000 through voluntarily departures. To make matters worse, the U.S. population grew by 44 million citizens since year 2000, which places a greater burden on taxpaying workers. For most American workers, real wages (purchasing power) have not increased for decades and are not projected to improve soon.

Another alarming trend involves the dramatic rise in the contingent workforce, which now stands at 60 million employed workers, or 40% of the Private Sector Labor Force. The BLS defines the contingent workforce as the portion of the labor force that has “nonstandard work arrangements” or those without “permanent jobs with a traditional employer-employee relationship”. The Jobenomics U.S. Contingent Workforce Challenge Report estimates that the contingent workforce could be the predominant source (over 50%) of employed U.S. labor by 2030, or sooner, depending on economic conditions and seven ongoing labor force trends.[4]

The contingent workforce is comprised of two general categories: core and non-core. Core contingency workers include agency temps, direct-hire temps, on-call laborers and contract workers. Core workers generally represent low wage earners that have nonstandard work arrangements out of necessity, often subjected to exploitation, and usually not entitled to traditional employer-provided retirement and health benefits. The non-core category includes independent contractors, self-employed workers and standard part-time workers who work fewer than 35 hours per week. Non-core workers generally seek nonstandard work agreements as a matter of choice.

Jobenomics views the non-core workforce as a positive economic force that will grow significantly via the emerging digital economy. On the other hand, Jobenomics views the core contingency as a major labor force challenge as more and more citizens work for substandard wages, become frustrated, and seek alternative sources of income. The contingent workforce is addressed in this analysis from a Not-in-Labor-Force perspective and discussed in detail from an overall employment perspective in the Jobenomics Employment Analysis.[5]

Contingent work, low wages and the attractiveness of the U.S. welfare/means-adjusted earnings programs are fueling the rapid and increasing exodus of citizens from the U.S. labor force. In 2014, 86% of all Americans (including workers with earnings, Not-in-Labor-Force and those that cannot work, such as children, caregivers, disabled, elderly, etc.) made below average income. Out of a total of 160.1 million full-time and part-time American workers with earnings, 115.2 million workers (72%) make less than the U.S. mean (average) income of $54,964.

As shown, the demographics with the greatest need and potential are women, minorities, new workforce entrants and the growing cadre of poor white males. 96% of new workforce entrants aged 15 to 24, 85% of Hispanics, 82% of Blacks, 80% of Females, 68% White Non-Hispanics, 65% of Males and 60% of Asians earn below average wage. The good news is that both women-owned and minority-owned firms have been growing at rates far greater than the national average.

A major reason for Not-in-Labor-Force growth is due to the growing attractiveness of welfare and entitlement benefits. The U.S. federal government funds 126 separate programs targeted at low income people. State, county, and municipal governments offer additional welfare and public assistance programs. Combined welfare benefits pay more than minimum wage jobs in 35 states—in many cases, significantly more. 35 U.S. states offer welfare packages (not including Medicaid) more generous than the most lavish and liberal European countries. 39 states pay welfare recipients more than the starting wage for a secretary and in 11 states more than the first year wage for a teacher.

Once a person becomes dependent on welfare, transition to workfare becomes difficult. Loss of critical workforce skills increase proportionally to the length of time a person is not working. Most of the 5 million open employment positions in the United States are due to a deficit of skills and the capability to perform effectively in a working environment. Prolonged dependency generates anger, grievances, activism, violence and counter-cultural lifestyles.

In today’s consumption-based and market-driven society, there is never enough public or familial assistance to satisfy the financially disaffected. Consequently, those who need additional income often turn to temporary jobs, barter, the underground economy as well as illicit lifestyles (gangs, drugs and crime) rather than legitimate forms of long-term employment. Jobenomics contends that workfare is the only reasonable alternative to welfare. The problem is how to motive and facilitate this transition.

The solution to growing America’s economy, healing the middle-class and strengthening the labor force involves putting the U.S. small business engine into over-drive. Energizing existing businesses and creating new small and self-employed businesses could create 20 million net new jobs within a decade. To this end, Jobenomics is working with a number of cities to implement Jobenomics Community-Based Business Generators to mass produce startup businesses.

Jobenomics Community-Based Business Generators mass-produce startup businesses by: (1) working with community leaders to identify high-potential business owners and employees, (2) executing a due diligence process to identify potential high quality business leaders and employees, (3) training and certifying these leaders and employees in targeted occupations, (4) creating highly repeatable and highly scalable “turn-key” small and self-employed businesses, (5) establishing sources of startup funding, recurring funding and contracts to provide a consistent source of revenue for new businesses after incorporation, and (6) providing mentoring and back-office support services to extend the life span and profitability of businesses created by the Jobenomics Community-Based Business Generators.

Starting a notional pool of 10,000 candidates, Jobenomics will work with local civic organizations (churches, non-profits, sports teams, etc.) to identify and nominate the top 10% to 25% candidates, who they know, for the Jobenomics Community-Based Business Generator program. This is the first stage of the due diligence process to separate the proverbial wheat from the chaff. These nominees will then be subjected to standard aptitude and attitude tests in order to willow the list down to several hundred trainees who we believe that could become high-quality employees and business leaders. Approximately 10% would undergo business school training and certification (goal is to startup a locally-owned business) and 90% some form of skills-based training and certification that would be needed in our new startup businesses. If each startup employed 10 people, 20 to 30 new small businesses would be created.

While the overall goal is to mass-produce small businesses, the Jobenomics Community-Based Business Generator will help all people who enter the program to find meaningful employment. Many of the initial candidates are likely to prefer working for existing companies rather than going through the Jobenomics process. Anticipating this, Jobenomics will implement a “pipeline” to connect these individuals who have undergone some level of due diligence to companies that are hiring. A common complaint that Jobenomics often hears from companies is that they have a very hard time finding good people who want to work and who have the right attitudes/aptitude for work. Consequently, Jobenomics Community-Based Business Generators will utilize a nationally recognized pipeline system that has recently matched hundreds of thousands veterans with employers.

In summary, the U.S. economy cannot be sustained by only 35% of the population that is eroding in terms of size, wages and income potential.

The private sector labor force produces the majority of American jobs, goods, services and revenue needed to sustain economic growth. 112 million private sector workers support 32 million government workers and contractors, 95 million able-bodied people who can work but chose not to work, 70 million who cannot work and the 15 million unemployed and underemployed. Of the 112 million employed Americans in the private sector, approximately 60% are standard full-time workers and 40% are part-time and independent continent workers.

If American policy-makers and decision-leaders are serious about revitalizing the eroding middle-class, they must address the growing voluntary workforce departures, contingent workforce and below mean income issues. Jobenomics believes that the place to start is with demographics with the greatest need and potential (i.e., women, minorities, new workforce entrants and the growing cadre of poor white males). Jobenomics suggests that the 2016 Presidential candidates, in both parties, should make solutions to these labor force issues their top priority.

[1] U.S. Bureau of Labor Statistics, Employment Situation Summary, http://www.bls.gov/news.release/empsit.nr0.htm

[2] Government workers pay taxes just like private sector workers. However, government relies on tax revenue to pay salaries. Hence, Jobenomics often uses private sector figures when discussing the relative strength of the U.S. labor force and the economy.

[3] U.S. Bureau of Economic Analysis, Gross Domestic Product: Second Quarter 2016 (Advance Estimate)

Annual Update: 2013 through First Quarter 2016, 29 July 2016, http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

[4] http://jobenomicsblog.com/wp-content/uploads/2016/05/U.S.-Contingent-Workforce-Challenge-4-April-2016.pdf

[5] http://jobenomicsblog.com/jobenomics-u-s-employment-analysis-Q2-2016/

Jobenomics Community-Based Business Generators

Jobenomics Community-Based Business Generators

www.Jobenomics.com

By: Chuck Vollmer

15 August 2016

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Jobenomics Community-Based Business Generators - 15 August 2016

The way that government and big business can plan, manage and support small business and job creation is via community-based business incubators, business accelerators and business generators.

Business incubators tend to focus high-tech, silver bullet innovations that have extraordinary growth and employment potential. Business accelerators focus on expanding existing businesses in order to make them larger and more profitable. The Jobenomics business generator concept involves mass-producing small and self-employed business with emphasis on lower-tech but plentiful service-providing businesses at the base of America’s economic pyramid. Many cities have business incubators, usually located at or around universities or technology parks, and business accelerators that are associated with mezzanine financing institutions. Jobenomics is working with cities and states to create business generators to mass-produce startup small and self-employed businesses.

The process starts by using community leaders to identify high potential job seekers. Churches, non-profit institutions, schools, sports teams and veterans groups are a great source for identifying talent, desire and fortitude. These organizations provide the first phase of the triage process by screening and assessing high performance people who are known to them. The second stage is accomplished during onboarding that involves Jobenomics screening and assessing. The third stage uses aptitude and personality tests to determine potential career paths.

Once completed, candidates will be separated into a business leader group or a high potential employee group for training. The leader group will undergo management and startup business training. The employee group will undergo skills training based on the role that they will assume in the startup business (operational, technical, mechanical, financial, marketing, administrative, etc.). After the training is completed and certifications awarded, the team will commence startup operations under the guidance and assistance of the Jobenomics Community-Based Business Generator team. Jobenomics contends that Community-Based Business Generators could vastly improve the rate of startups and expanding businesses, and reduce the rate of contracting and closing businesses.

Starting with a notional pool of thousands of candidates, Jobenomics will work with local civic organizations (churches, non-profits, sports teams, etc.) to identify and nominate the top 30% to 50%, who they know, for the Jobenomics Community-Based Business Generator program. This is the first stage of the due diligence process to separate the proverbial wheat from the chaff.

These nominees will then be subjected to standard aptitude and attitude tests in order to identify and assist those (1) those that should be sent other educational (GED and postsecondary) or training (vocational) centers for career development, (2) those that are qualified and suitable for immediate employment with existing companies, and (3) those that desire and have an aptitude for starting a small or self-employed business. Jobenomics Community-Based Business Generator will help all people who enter the program to find meaningful employment and career paths.

Jobenomics envisions that 25% of the nominees would seek a traditional education and training path, 25% would be hired directly by existing business who are looking for quality workers, and 50% would seek a more independent and self-sufficient route offered by a small business startup or self-employment.

Of the 50% that choose the Jobenomics Community-Based Business Generator training and certification process, Jobenomics anticipates that approximately 25% will eventually implement a small business startup or incorporate as a self-employed business. The 75% that undergoes but does complete Jobenomics Community-Based Business Generator process will be certified (with empirical data by professional testing and evaluation) as high-quality candidates for immediate employment or traditional education/vocational training.

Many of the initial candidates are likely to prefer working for existing companies rather than going through the Jobenomics process. Anticipating this, Jobenomics will implement a “pipeline” to connect these individuals who have undergone some level of due diligence to companies that are hiring. Consequently, the Jobenomics management team includes a nationally recognized leader who developed such a pipeline system that has matched 250,000 veterans with companies. This system is ideally suited for matching Jobenomics candidates to local employment vacancies.

The overall objective is to mass-produce small and self-employed businesses, which makes the Jobenomics Community-Based Business Generator process unique as a traditional business and workforce development center. Traditional workforce development processes focus on preparing potential workers for employment by existing businesses—usually large corporations. For marginalized individuals at the base of the American economic pyramid (especially those in depressed urban and rural areas) the odds of employment at existing businesses are slim as evidenced by the long lines at traditional job fairs versus the low percentage of people hired.

The Jobenomics process focuses on preparing workers for starting a business, whether they actually start one or use the experience to be more competitive to get a job. In today’s world, gainful employment is difficult and oriented to those that are currently employed, credentialed or high-skilled. Conversely, a common complaint that Jobenomics often hears from companies is that they have a very hard time (1) finding good people who want to work, (2) who have the right attitudes and aptitude for work, and (3) who have workforce credentials, experience or related skills.

Every nominee that enters the Jobenomics process will setup a self-employed business, which can be incorporated in a matter of days, and undergo elementary business training. The reason for setting up a small business is to make them more competitive in today’s job market. Many employers prefer to “try before they buy”. An incorporated self-employed individual can position themselves for subcontract or contingent work (1099) as a prelude to standard full-time work (W2). Even if a self-employed individual never receives an income as a self-employed business, that individual can present themselves with credentials (Employer ID Number, website, business card and skills resume) that align with the business community. In addition, Jobenomics will provide additional credentials regarding the individual’s workforce aptitude, skills and suitability tailored to the specific hiring opportunity. Jobenomics credentialing, along with letters of recommendation from the nominees’ sponsoring organization, will greatly distinguish the individual from the masses of unemployed or new or returning workforce entrants.

Today, the United States does not have standardized national, state or local processes to create or mass-produce startup businesses. The U.S. startup process is largely ad hoc. By instituting a community-based (all jobs are local) standardized, repeatable and scalable process to mass-produce startup businesses, millions of new establishments could be created across America. By being part of a small business team, team members will be motivated to grow the business in order to make it more profitable, which facilitates upward mobility, higher wages, better benefits, potential equity positions, and, perhaps most importantly, a sense of camaraderie and purpose.

Job creation is the number one issue facing U.S. in regard to economic growth, sustainment and prosperity. Jobs do not create jobs, businesses do, especially small businesses that currently employ 80% of all Americans and created 80% of all new jobs since the end of the Great Recession.

Unfortunately, America is focused on big business and government employment solutions that have not been very effective growing the U.S. labor force. In fact, the U.S. labor force is in a state of decline as evidenced by the eroding middle-class and the transformation from standard full-time to part-time and contingency workers. With the next fifteen years, Jobenomics forecasts that the contingent workforce will replace traditional full-time workforce as the dominant force of labor in the United States—a trend that is largely unknown to policy-makers and the American public.

Jobenomics asserts that the four demographics with the highest need and growth potential include women, minorities, new workforce entrants, and the large cadre of financially distressed citizens who want to work or start a business. These demographics are ideally suited for the accommodating the growing contingent workforce and attracting new labor force entrants that often do not share the same employment dream of older generations.

Jobenomics believes that new small, emerging and self-employed businesses could create 20 million new jobs within a decade, if properly incentivized and supported. Notwithstanding filling the 5+ million open U.S. jobs positions, the emerging Energy Technology Revolution (ETR) and the Network Technology Revolution (NTR) could create 20 million net new American jobs within a decade given proper leadership and support.

Using the Jobenomics Community-Based Business Generator process of mass-producing highly repeatable and scalable “turn-key” small and self-employed businesses, America writ large could create tens of millions of jobs that would transform the U.S. labor force, middle-class and economy as well as providing hope and jobs for marginalized urban and rural American communities.

Workforce Education/Training Challenge

www.Jobenomics.com

By: Chuck Vollmer

1 August 2016

An 11-page Workforce Education/Training Challenge White Paper is available at: Workforce Education versus Training Challenge 1 Aug 2016

Executive Summary. The Father of American Education, Horace Mann, stated that “Education then, beyond all other devices of human origin, is the great equalizer of the conditions of men, the balance-wheel of the social machinery.” While Jobenomics agrees, the educational paradigm required for yesteryear’s workforce development may not be appropriate for many in today’s workforce. Today the U.S. labor force is increasingly characterized by income inequality, an eroding middle class and a growing contingent workforce that traditional degree-oriented educational programs have not been able to mitigate. More skills-based training and certification programs are needed.

The bifurcation of American society into haves and have-nots, skilled and unskilled, and hopefuls and the hopeless is a major educational/training challenge. To those at the top of the American economic pyramid, the old paradigm of “get a degree to get a job, get a better degree to get a better job” is more important than ever. On the other side of the ledger, to those at the bottom of the economic pyramid, more workforce technical and social skills training are needed to stem the increasing exodus to welfare and alternative lifestyles. For many at the bottom getting a postsecondary degree is a bridge too far. Earning a high school degree no longer guarantees a livable wage or viable career.

Education is defined as the process of imparting or acquiring general knowledge, developing powers of reasoning and judgment, and generally of preparing intellectually for mature life. Education generally involves learning theory. In the United States, there are four levels of education: pre-primary, primary, secondary and tertiary. Pre-primary education includes kindergarten, nursery schools, preschool programs and child/day care centers. Primary refers to first through eighth grades. Secondary usually refers to the last four years of high school (ninth through twelfth grade). Tertiary, also called postsecondary, refers to academic pursuit undertaken after high school. Primary and secondary education are compulsory (required by law), whereas pre-primary and postsecondary education is not. Postsecondary undergraduate programs, generally include associate and bachelor (baccalaureate) programs. Postsecondary post-baccalaureate pursuits generally include masters and doctorate programs. Primary, secondary and tertiary/postsecondary are degree-oriented.

Training involves teaching a person a particular skill, knowledge or type of behavior that is related to specific competencies. Training has targeted goals of improving an individual’s capability, capacity, productivity and performance. While some training programs are degree-oriented (such as technical colleges), most training programs (such as skills training, on-the-job training, occupational training, apprenticeships and internships) are certificate-oriented.

From a Jobenomics perspective, understanding the difference between education and training is fundamental to U.S. labor force development. Education is foundational and generally measured by tenure. Training is specific and measured by what one can do once completed. Educational degree-oriented programs are measured in years and are usually expensive. Training programs are often as short as weeks or months, and are relatively inexpensive. For people seeking careers, degree-oriented programs are usually the best choice. For the underprivileged, unskilled and poorly educated segment of society, certificate-oriented skills-based training provides the most effective way to getting a good job, the first step towards a meaningful career.

Jobenomics Delaware

Jobenomics Delaware Initiative (JDI)

By: La Mar Gunn, Candidate for Lt. Governor

30 June 2016

Download presentation and white paper at:

Jobenomics Delaware Presentation - 23 June 2016

Jobenomics Delaware White Paper 30 June 2016

Together, we developed an actionable plan to create triple the current rate of new job creation to create 150,000 net new jobs in Delaware within the next ten years.

While JDI addresses big business and government employment, its principal focus is on highly-scalable small and self-employed businesses that employ 80% of all Americans and have produced 80% of all new jobs this decade. Specifically, JDI will focus on (1) women, minorities, new workforce entrants and other hopefuls with the highest need and growth potential, (2) mass-producing startup businesses via community-based business generators, (3) attracting new highly-scalable businesses to Delaware with emphasis on filling open job positions and exploiting emerging and new employment opportunities, (4) forming alliances with countries, cities, corporations and entrepreneurs, and (5) identifying sources of investment in order to achieve the JDI business and job creation goal.

The initial JDI notional framework includes nine job creation areas for depressed urban (with emphasis on Wilmington, Dover and Newark), rural (with emphasis on agriculture and aquaculture) and coastal communities. JDI will focus on filling current open jobs and exploiting emerging opportunities in caring services, construction, urban mining, the energy technology revolution and the fast growing digital economy. This notional framework will evolve as community stakeholders adopt new areas for development.

The solution to growing Delaware’s economy and labor force involves putting Delaware’s small business engine into over-drive. Therefore, the JDI team will work with community leaders to implement community-based business generators (CBBGs) that will mass produce startups, extend the “life span” of fledgling firms and accelerate existing businesses by (1) working with community leaders to identify and train high potential small business owners and employees, (2) implementing highly repeatable and highly scalable “turnkey” businesses with emphasis on the service-providing industries, (3) establishing sources of startup funding, recurring funding and follow-on contractual work to provide a consistent source of revenue for new businesses after incorporation, and (4) providing ongoing mentoring and support services.

A 50-page JDI presentation is available at www.GunnForUS.com. If interested in joining JDI or setting up a meet to discuss this initiative, contact me at (302) 218-640.

Jobenomics Baltimore City

Jobenomics Baltimore City

By: Dr. Alvin C. Hathaway, Commissioner of the Maryland Governor’s Workforce Investment Board, and Chuck Vollmer, Jobenomics Founder and President

23 June 2016

Download complete presentation at:

Jobenomics Baltimore City Presentation - 23 July 2016

Jobenomics is pleased to announce a partnership with leading community leaders, led by Dr. Al Hathaway, Commissioner of the Maryland Governor’s Workforce Investment Board. Jobenomics Baltimore City’s goal is to restore the inner-city labor force by creating 100,000 net new jobs in Baltimore City within the next 10 years with emphasis on minorities, women, new workforce entrants and the contingent workforce. Jobenomics Baltimore City will institute local Community-Based Business Generators to mass-produce inner-city businesses in order to achieve the 100,000 new job goal.

Jobenomics Baltimore City’s New Job Framework is tailored to the demographics of Baltimore City. As shown, emphasis is being given to lower skill zones that tend to be more predominant in the poor sections of the inner-city. To date, the Jobenomics Baltimore City plan has been endorsed and lead by community leaders who are now getting endorsement and support from major corporations (Under Amour for manufacturing) and major medical institutions for the healthcare and social assistance programs. The team is also working with non-profits, the State and City managers to finalize and implement an actionable plan.

Jobenomics-New York City

Jobenomics launches New York City initiative to create 1 million net new jobs in New York City over the next decade. This initiative is lead by Rev, Michel Faulkner, a former New York Jets NFL player, who started the Institute for Leadership in Harlem to identify and train potential small business startups in association with Jobenomics. Michel Faulkner is also a candidate for Mayor of New York and a former candidate for the U.S. Congress. (Faulkner for NYC Mayor Website at www.faulknerfornewyork.com). The following white paper describes the Jobenomics-New York City initiative.

Jobenomics-New York City

By: Rev. Michel J. Faulkner

Candidate for Mayor of New York City

17 November 2015

Download PDF version: Jobenomics New York City 19 November 2015. Jobenomics New York City White Paper 19 November 2015.

Also see: Faulkner for NYC Mayor, http://www.faulknerfornewyork.com/.

After ten years of effort, hundreds of meetings with policy-makers, thousands of meetings with business and community leaders and an outreach effort to over two million people, many Americans believe that the Jobenomics Plan for America is the most mature and comprehensive business and jobs creation plan in the United States. Charles D. (Chuck) Vollmer, author and founder of the Jobenomics national grassroots movement, has joined my campaign for mayor of New York City. Together, we are developing an actionable plan to create one million net new jobs in New York City within the next ten years via implementation of community-based business generators that will mass-produce tens of thousands of startup businesses.

Jobenomics deals with economics of business and job creation. Jobenomics national grassroots movement’s goal is to facilitate an economic environment that will create 20 million net new U.S. middle-class jobs within a decade. The movement has reached millions of people via its blog, reports, TV/radio, social media, lectures and word-of-mouth.

Research. Jobenomics produces a series of comprehensive reports including quarterly employment and unemployment reports that address the U.S. labor force, business and economic conditions. Jobenomics provides advice and timely data to policy-makers and decision-makers regarding business and job creation trends.

Focus Areas. While Jobenomics addresses big business and government employment, its principal focus is on highly-scalable small and self-employed businesses that employ 80% of all Americans and have produced 80% of all new jobs this decade. Women, minorities, new workforce entrants and the growing cadre of poor white males represent future business owners with the highest need and growth potential.

National-Level Initiatives. Jobenomics is leading two national-level initiatives called the Energy Technology Revolution (ETR) and the Network Technology Revolution (NTR). These initiatives could create 20 million net new American jobs within a decade. The ETR plan addresses emerging technologies, processes, systems and services across the entire energy spectrum for electrical power generation, transportation, storage and energy-related services. The NTR is characterized by a “perfect storm” of advanced technologies including: cloud computing, semantic webs, ubiquitous computing, advanced networks, machine learning, robotics, credentialing, Internet-of-Things and artificial intelligence agents. The NTR plan addresses America’s transition from a traditional to a digital economy and the transformational impact that the NTR will have on the economy, institutions, businesses and the labor force.

Jobenomics New York City (J-NYC): The J-NYC team is currently operating out of the Institute for Leadership facilities in Harlem (http://www.institute4leadership.com/). The initial draft of the J-NYC plan will be completed by mid-2016, depending on ongoing consensus building activities and community participation, and will be a “living” document with actionable and measurable milestones built on the framework of Jobenomics Plan for America. The J-NYC plan focuses on (1) NYC demographics with the greatest need and potential, (2) mass-producing startup businesses via community-based business generators, (3) attracting new highly-scalable businesses to NYC with emphasis on the network-centric and e-commerce firms, (4) forming alliances with countries, cities, corporations and entrepreneurs and (5) identifying sources of investment in order to achieve the one million net new jobs goal.

The J-NYC Business and Job Creation Plan’s objective is to quadruple the historical rate of NYC new job creation (232,000 per decade) with a goal of one million net new livable wage jobs by 2026. The plan concentrates on (1) implementing community-based business generators throughout the NYC metropolitan area, (2) developing workforce skillsets to fill vacant NYC jobs, (3) exploiting employment opportunities with the largest and fastest growing NYC industries, (4) implementing new business and job creation initiatives tailored to the needs of New Yorkers and (5) positioning the NYC labor force for substantial opportunities generated by energy and network technology revolutions.

J-NYC Community-Based Business Generator (J-CBBG) Concept. The solution to growing the NYC economy and labor force involves putting NYC’s small business engine into over-drive. Therefore, the J-NYC team will work with borough leaders to implement community-based business generators that will mass produce startups, extend the “life span” of fledgling firms and accelerate existing businesses. J-CBBGs will (1) identify and train potential small business owners and employees, (2) implement highly repeatable and scalable businesses with emphasis on the service-providing industries, (3) establish sources of startup funding, recurring funding and contracts to provide a consistent source of revenue for new businesses and (4) provide ongoing mentoring and support services.

Filling Open NYC Job Vacancies. As of November 2015, NYC’s five boroughs had 44,790 job vacancies.[1] 40,240 or 90% of the open positions are related to ten occupations: management, computer services, business and financial, sales, office support, healthcare, entertainment, social services, transportation and food services. Corporations with the largest number of open vacancies were Capital One, JP Morgan Chase, Oracle, King Teleservices and Deloitte with a total of 6,129 open positions. J-CBBGs will work with companies and occupational associations that have a vested interest in fulfilling these vacancies via training or certifying viable candidates with a specific skillset, or starting new businesses that can provide tailored services as subcontractors. The J-CBBGs will work with selected non-profits, such as employment-related institutions and churches (three Harlem mega-churches with over 250,000 parishioners have already agreed to support the J-CBBG concept), to perform the initial candidate due diligence. J-CBBGs will conduct further evaluations (Jobenomics and The Institute for Leadership already perform testing of this sort) to determine if candidates are ready for employment and capable of starting their own small business (self-employed, home-based, e-commerce, contractor, franchise, etc.). J-CBBGs will also build teams of future employees and future startup owners to increase camaraderie, accountability and successful launches.

Exploiting Employment Opportunities with the Largest and Fastest Growing NYC Sectors and Businesses. When preparing a labor force for maximum employment, J-NYC will begin with the largest and fastest growing sectors. NYC employs 4,191,500 workers. 542,000 (13%) work for government and 3,648,900 (87%) for the private sector. J-NYC’s business and job creation effort concentrates, but not exclusively, on private sector service-providing industries that are the largest (82%) employers of New Yorkers and the fastest growing segment (2.1%) of the major employment sectors. While the goods-producing segment (manufacturing, construction, mining) are vitally important, J-NYC feels that there is sufficient attention already being given to this segment that has limit upside employment potential as compared to services.

Within the NYC service-providing sector, the largest and fast growing industries are: Education and Health Services (866 million employees, 2.5% growth in the last year); Professional and Business Services (687M, 2.1% growth); Trade, Transportation and Utilities (631M, 1.4% growth); Financial Activities (459M, 1.9% growth); Leisure and Hospitality (427M, 3.2% growth) and Accommodation and Food Services (340M, 2.3% growth).[2] As a result of this data, J-NYC will work with NYC-based associations and companies in each of these industries to determine the level of interest and support for the J-NYC plan and their desire to engage with J-CBBG sponsorship, employee training and business startups. From our initial conversations with various corporate leaders, there is a keen interest in “feeder” facilities that can provide certified job candidates and independent contractors. Many would prefer to subcontract than hire.

New J-NYC Business and Job Creation Initiatives. J-NYC’s outreach program has already started identifying potential stakeholders for business and job creation initiatives for those struggling to make a livable wage. Most stakeholders say that they are eager to support any viable workfare over welfare initiatives. As the J-NYC plan matures new initiatives and programs will be added to the ones currently being pursued by J-NYC. J-NYC’s top three job creation initiatives are The Leadership Training Program, Urban Mining and Direct Care Centers.

The Leadership Training Program is underway at the Institute for Leadership (IFL) and producing solid results. This program trains, empowers, and partners with leaders and organizations that are already in the community including church leaders, business executives, government officials, athletic coaches and others who function in positions of leadership. The program also is working with leaders on health reform, financial management and entrepreneur training. Perhaps, the greatest benefit of this program is that J-NYC has a solid base of community leaders willing and eager to support the maturing J-NYC plan.
Urban Mining involves monetized urban waste streams such as municipal solid waste (MSW), construction and demolition material, tires and electronic waste. Waste is comprised of organic and nonorganic materials that can be reclaimed as commodities. J-NYC advocates a zero landfill/export policy and programs that convert waste into fertilizers, energy, biofuels and valuable raw materials. Jobenomics created eCyclingUSA LLC (http://ecyclingusa.com/) to help communities reclaim high value metals from electronic waste and use profits (average $30 million per year) for jobs and business creation. A typical eCyclingUSA plant can produce $30 million in profit and employ several hundred people. J-NYC is currently pursuing efforts to locate multiple eCyclingNYC facilities throughout the NYC metro that will hire the disadvantaged and formerly incarcerated.
Direct Care Centers are oriented to training and starting home-based, self-employed businesses that provide in-home eldercare, healthcare and childcare services. Direct Care is ideal for struggling households run by women who are looking for work or supplemental income to support their families. One of the biggest reasons that single mothers are struggling financially is due to the cost of childcare. Direct Care centers can help free many single mothers to join the workforce by training and supervising other single mothers to care for a neighbor’s children for a fraction of the cost of other services. Direct Care Centers can also provide personnel and contract workers to large organizations, like New Partners, a subsidiary of Visiting Nurse Service of New York. The Direct Care Center concept is the next logical step in IFL’s health reform effort.

Energy Technology Revolution (ETR). The ETR will create hundreds of millions of jobs globally and millions for cities, like NYC, that embrace transformative energy technologies, processes, systems and services. Using Jobenomics’ comprehensive ETR report as a baseline, J-NYC is developing a strategy for the greater NYC metropolitan area in regards to the economic impact and employment potential of the ETR. For electrical power generation, J-NYC will evaluate the impact and challenges of cleaner fossil fuels, renewables, grid-level systems, point-of-use systems, greenhouse gas emissions, power density, storage, next-generation technologies, and investment. J-NYC also plans to form alliances with sister cities in California, Japan, China and Germany that are embracing their versions of the ETR. For example, Tokyo’s metropolis is similar to NYC in terms of power density and energy issues. Consequently, it would be prudent to take advantage of any Tokyo’s successful ETR pursuit that could fulfill a NYC energy need. For example, Tokyo Gas plans to install 2,500,000 energy efficient miniature point-of-use natural gas fuel cells in homes and apartments for power and heat generation. NYC can also learn from Germany’s Energiewende (German for energy transition) national initiative to transition Germany from fossil and nuclear fuels to renewable energy, California’s 2030 goal of having 50% of its electrical generation from renewables, and China’s extensive research in next generation ETR technology. In the transportation area, sister cities in these countries are leading the way in advanced vehicles, alternative fuels and advanced storage systems that could be applied to shaping the NYC energy ecosystem. In energy services sector, energy efficiency, energy conservation, energy security and Energy-as-a-Service (EaaS) businesses are growing at phenomenal rates and fertile areas for employment and startups. Over the last five years, the Institute for Leadership has participated in Jobenomics initiatives in the energy services sector including energy audits, weatherization and solar installation certification training. As a result, the IFL team believes that Jobenomics ETR plan is solid and will provide an excellent baseline for the J-NYC ETR plan, consensus building and collaborative engagement.

Network Technology Revolution (NTR). The NTR will create literally billions of new jobs globally as the digital economy takes root. Today, in terms of e-commerce, the overall U.S. economy is 5% digital and growing at 20% per year. The United Kingdom leads the world with a 12% digital economy followed by South Korea at 8% and China at 7%. China’s strategy to become the world’s leading digital economy is as breathtaking as it is comprehensive. China is attempting to replicate its manufacturing miracle of lifting 400 million people out of poverty in two decades by implementing a combined public/private e-commerce strategy to lift an equal amount of rural Chinese out of poverty by 2030. Alibaba Group, a Chinese conglomerate that recently (2014) had the largest Wall Street IPO in history, is positioning itself to be a global e-commerce leader by financing the creation of 10 million new Chinese network-centric microbusinesses. Other Chinese conglomerates and government institutions are pursuing similar efforts. J-NYC plans to collaborate with countries and companies like these, as well as U.S. corporate giants like Amazon, Google, Apple and Microsoft to help NYC create businesses and jobs in the rapidly growing digital economy. J-NYC is in the process of identifying hundreds of emerging companies that have the potential to create jobs and small businesses in the same way that Uber (cars for hire), AirBNB (rental accommodations) and WeWork (office space) has accomplished. Founded in 2010, WeWork is now the fastest-growing consumer of office space in 15 “high IQ” cities and is one of the largest office space providers in NYC. The NTR also has a very dark side. According to recent studies, computer automation can eliminate as much as 47% of the U.S. labor force in the next two decades. Automation has been replacing manual labor for years, but via the NTR cognitive skill jobs are increasing at risk. If there is any doubt just ask Apple’s Siri, Amazon’s Echo or IBM’s Watson. The J-NYC NTR plan will seek to mitigate potentially massive NYC labor force departures (due to automation or voluntary departures) by creating highly-scalable new jobs and businesses that can compete and prosper in the digital economy. The J-NYC NTR team will also work with existing businesses to adapt and harness the power of new NTR technologies, processes, systems and services to compete and prosper more effectively.

Funding. J-NYC will pursue various sources of funding. The Institute for Leadership has an initial bank pledge of $20 million for micro-business loans up to $50,000 for each new J-NYC small business created. Other potential sources of funding include government bonds, debt/equity financing, corporate sponsorships, crowd funding and impact investing. Impact investing refers to investments made to organizations that generate a measurable, beneficial social impact. Socially conscious investing has grown in popularity with family foundations, philanthropic organizations, endowments, pensions, hedge funds, mutual funds and other financial institutions like Blackrock and Bain Capital. NYC has a plethora of “top 1%” organizations and philanthrocapitalists (philanthropists who see themselves as social investors) that could be encouraged to underwrite J-CBBGs for their service to the public good as well as their public relations value to their organizations.

Contact. The J-NYC team is interested in community leaders that are interested in workforce and small business development as outlined herein. Please contact me or the J-NYC team at 212.690.7748 and the address is 245 W. 135th Street, New York, NY 10030.

[1] New York State Department of Labor, Labor Statistics, 9 November 2015, https://www.labor.ny.gov/stats/nyc/

[2] New York State Department of Labor, Current Employment Estimates, https://labor.ny.gov/stats/lscesmaj.shtm

Urban Mining

Urban Mining

www.Jobenomics.com

By: Chuck Vollmer

2 August 2015

Download PDF Version: Jobenomics Urban Mining - August 2015

Urban mining is defined as a process of reclaiming raw materials and metals from municipal waste streams including construction and demolition material (C&D), municipal solid waste (MSW), electronic waste (e-waste) and tires. These waste streams contain combustible and non-combustible materials. Combustibles are carbon-based matter that has caloric value that can be converted to marketable products via waste-to-organic and energy via waste-to-energy technologies. Non-combustible elements can be reclaimed via waste-to-material technology. Every U.S. community should consider urban mining to (1) reclaim valuable raw materials and metals, (2) reduce landfilling and exporting of toxic waste, (3) mitigate environmental pollution associated with traditional surface and subsurface mining operations, and (4) produce revenue for local business and job creation.

Waste-to-Organic. Waste-to-organic facilities convert biological waste into commercially-viable products such as compost and mulch. Approximately 55% of U.S. landfilled waste is biodegradable organic waste. When human and animal bio-waste, food scraps, yard trimmings, paper and wood are landfilled, anaerobic bacteria degrade the organic material, producing greenhouse gases, volatile organic compounds and leachates that are environmentally hazardous.

Approximately two-thirds of U.S. MSW can be composted. Composting is a managed system that uses microbial activity to degrade biological waste so that the end-product is relatively stable, reduced in quantity from the original feedstock, and free from offensive odors. Compost is widely used as a soil amendment to improve soil structure, provide plant nutrients, conserve water, sequester carbon, and facilitate revegetation of disturbed or eroded soil. In the U.S., 28% of all cropland is eroding above soil tolerance rates, resulting in diminished agricultural yields. Composting offers up to four times more business and job creation opportunities than landfilling or incineration. For every million tons of MSW composted, 1,400 jobs can be created. Mulch is closely related to compost and used as a surface covering to retain moisture, contain weeds and make landscaping more attractive.

Waste-to-Energy. Waste-to-energy facilities use incineration, pyrolysis, plasma or gasification to convert organic waste into biofuels that can be used to generate electricity or produce synthetic gas, oil, tars and other marketable products. Incineration (burning) is oldest and most common process, but is generally considered the dirtiest. However, modern incinerators are more efficient and cleaner burning. Pyrolysis burns waste material in an oxygen-free environment, producing carbon black (a commodity used in paints and toner cartridges), and synthetic fuels and substances. Pyrolysis is becoming increasingly popular but produces lots of ash and is often expensive. Plasma, which is essentially lightning in a bottle, is the most modern but yet unproven. Due to its ultra-high temperature, plasma is ideally suited for eliminating toxic waste including nuclear waste. Gasification is considered to be the cleanest and most cost effective waste-to-energy system that mainly produces synthetic gas as an end-product. Gasification is in use in over ten countries. A typical waste-to-energy plant employs several hundred people.

Waste-to-Material. Waste-to-material facilities reclaim non-organic elements and metals from MSW, C&D, e-waste and tires. Advanced technology material recovery facilities can produce over $30 million worth of annual profits and hundreds of jobs for a medium-sized city. Unfortunately, most city managers do not realize that they forego this source of revenue by landfilling or exporting items that contain high value materials, such as precious metals, common metals, and plastic and rubber products.

E-waste (consumer electronics and appliances) is the fastest growing waste stream in the U.S. According to the U.S. Environmental Protection Agency (EPA)[1], 2.37 million tons of consumer electronics and computer-related waste is ready for end-of-life management with 5 million tons in storage. The EPA[2] estimates 4.1 million tons of major appliances, 1.8 million tons of small appliances and 21.0 million tons of miscellaneous durable goods are discarded annually. Each year, 16 million household appliances (refrigerators, air conditioners, dehumidifiers) that contain ozone-depleting refrigerants and foam blowing agents are ready for special handling and disposal.

The EPA calculates that 75% of all U.S. consumer electronics and computer-related waste is landfilled and 25% is recycled. Of the 25% recycled, 80% is exported to countries where extraction processes are often unregulated and unsafe. Consumer electronics and computer-related waste grew by 120% in the last decade, and is forecast to exceed this growth rate in the next decade largely due to advent of mobile phones, flat panel displays and cloud computing. Worldwide, 2 billion PCs are currently in operation will be soon ready for end-of-life management. In the United States, over one billion (6 million tons of which two-thirds are toxic due to lead content) TV and computer monitors with cathode ray tubes are now ready for end-of-life disposal. Americans also dispose an untold amount of other e-waste related materials such as 8 million vending machines; tens of millions of stoves, dishwashers, HVAC systems, water heaters, ducting, wiring and light fixtures; and tens of millions of tons of industrial scrap metals and plastics that can be reclaimed by waste-to-material plants. National disasters produce vast stockpiles of non-organic elements and metals.

Americans discard 300 million scrap tires per year. Scrap tire markets include tire-derived fuel, ground rubber, aggregates and exports. The primary means of disposal of scrap tires is tire-derived fuel due to their high heating value. The typical selling price for tire-derived fuel is approximately $50/ton. Ground rubber mulch, pellets and powders sell for between $300/ton and $8,000/ton for ultra-fine and pure mesh. Pyrolysis of waste tires generates combustible gases, oil, and char products. Approximately 25% of a scrap tire consists of steel that currently sells for $250/ton.

In Conclusion, American urban mining is decades behind Europe and China in terms of advanced technology material recovery systems. Of the 3,000+ U.S. recycling companies, the vast majority use manual processes to strip out high value metals and discard the remaining materials in landfills. In many cases, ozone-depleting refrigerants and foams are not handled properly. As a result, Jobenomics started eCyclingUSA LLC (www.eCyclingUSA.com and eCyclingUSA Presentation -22 May 15) to help local communities design and implement turnkey advanced technology material recovery facilities (Advanced Technology Materials Recovery Facilities 2 August 2015) that can safely, cleanly and efficiently monetize high-value waste streams in order to create the revenue necessary to mass-produce new small businesses, which in turn, creates thousands of new inner city jobs (see Jobenomics Minority-Owned Business initiative: Minority-Owned Businesses - 10 Jan 2014). Urban mining also has many indirect benefits including reducing transportation costs, mitigating the effects landfilling toxic substances, and producing substantial environmental savings over traditional mining methods. According the EPA, urban mining uses 75% less energy, emits 86% less polluted air and leaches 76% less polluted water into the ground than traditional surface and subsurface mining operations.

[1] EPA, Electronics Waste Management in the United States Through 2009, published May 2011, http://www.epa.gov/osw/conserve/materials/ecycling/docs/summarybaselinereport2011.pdf

[2] EPA, Municipal Solid Waste in the United States, 2009 Facts and Figures, Table 12, Page 67, http://www.epa.gov/osw/nonhaz/municipal/pubs/MSWcharacterization_fnl_060713_2_rpt.pdf

Minority-Owned Businesses

Download PDF Version: Minority-Owned Businesses - 10 Jan 2014

Minority-Owned Businesses

www.Jobenomics.com

By: Chuck Vollmer

10 January 2014

Executive Summary. Today, there are 6 million minority-owned businesses in the US. Jobenomics advocates a national goal of 18 million by year 2020—a goal that is achievable and necessary. Race and ethnicity are important elements of America’s economic equation. Jobenomics forecasts that income opportunity (see Income Inequality versus Opportunity posting) will become a leading domestic issue as minorities assert their growing demographic, economic and political power. Racial and ethnic minorities currently constitute 40.8% of the US population, and are responsible for approximately $3 trillion worth of America’s expenditures and consumption for goods and services (see Consumption-Based Economy posting). This degree of economic power could fuel the creation of millions of minority-owned businesses that would provide income opportunity for millions of Americans.

US Minority Demographic Trends. Today, minorities comprise about 41% of the US population, but will be in the majority much sooner than most people recognize. According to the US Census Bureau[1], for the first time in American history, most (50.4%) American children younger than age 1 are now racial and ethnic minorities. Consequently, America could be a generation away from being a minority-majority nation—perhaps quicker, considering aging baby-boomers and low birth rates in the White-majority. California (60.3% minorities), Texas (55.2%), New Mexico (59.8%) and Hawaii (77.1%) are already minority-majority states.

According to 2010 Census data[2], the largest minority group is Hispanics and Latinos (Hispanic) with 50.5 million people, followed by African-Americans (Black) with 38.9 million, Asian-Americans (Asian) with 14.7 million, American and Alaskan Natives with 2.9 million, Native Hawaiian and Other Pacific Islanders with 0.5 million, and “Some Other Race” with 19.1 million. An additional 9 million Americans identified themselves as multi-racial from two or more races. 196.8 million Americans identified themselves as non-Hispanic Whites (White)—a 59.2% majority compared to a minority population of 40.8%.

Between 2000 and 2010, the White population grew by 2.3 million or 1.2%. Asians and Hispanics were the fastest-growing groups by percentage, or 43.3% and 43.0% respectively. The Hispanic population increased by 15.2 million between 2000 and 2010, accounting for half of total US population growth. Blacks grew at a rate of 12.3% for a total gain of 4.3 million over the decade. Asians added 4.4 million during this period. All other minority groups grew by 6.5 million at a combined rate of 26%.

Minorities in the US Labor Force. The US Department of Labor’s Bureau of Labor Statistics (BLS) recently completed a landmark study[3] regarding US labor force characteristics by race and ethnicity[4]. The three major minority groups that the BLS studied were Black, Hispanic and Asian. The following charts were created by Jobenomics using data from the BLS study to compare these major US minority groups’ employment and income characteristics to those of Whites. While important, smaller minority groups (American Indian, Alaskan Native, Native Hawaiian, Other Pacific Islanders, and people who identified themselves as multi-racial or from some other race) are not included in this analysis due to limited numbers (only 2.5% of the US labor force).

The US Civilian Labor Force includes all working-age persons who are employed or unemployed and looking for a job. In 2011, the US civilian labor force was 153.6 million out of a total population of approximately 309 million. Whites dominated the US labor force with 67% (103.3 million workers) of all workers, followed by Hispanics with 15% (22.9 million), Blacks with 11% (17.1 million) and Asians with 3% (4.7 million).

As shown in the following series of charts, employment in the five major occupational categories is more equally distributed between races/ethnicities than the 67% manpower advantage would imply.

As shown above, the five major occupational categories range from management on top, to service on the bottom in terms of median weekly earnings[5]. Based on these five categories, the three major minority groups fared reasonably well against the White majority as indicated in the following charts.

As a percentage of their group, Asian men (49%) were the most likely to be employed in the top category of “management, professional and related occupations” compared to Whites (35%), Blacks (24%) and Hispanics (16%). In “sales and office occupations” all four groups were relatively equally represented (17%, 18%, 15% and 17%). “Natural resources, construction and maintenance occupations” were dominated by Hispanics and Whites. “Production, transportation and material moving occupations” as well as “service occupations” were led by Blacks and Hispanics over Whites and Asians by 22% versus 14% of their respective work forces.

As a percentage of their group, Asian women (44%) were the most likely to be employed in the top category of “management, professional and related occupations” compared to Whites (42%), Blacks (34%) and Hispanics (25%). In “sales and office occupations” all four groups were relatively equally represented (26%, 31%, 32% and 32%). Women were not a major contributor by employment in the “Natural resources, construction and maintenance occupations” category. “Production, transportation and material moving occupations” were relatively equal amongst all women subgroups with Hispanic women having a slight edge. “Service occupations” were relatively close amongst all women subgroups with Hispanics (31%) followed by Blacks (28%), Asians (22%) and Whites (20%).

It is important to note that these two Occupation Employment charts are calculated as a percentage of their group, as opposed to a percentage of total employed, which, as discussed earlier, is dominated (67%) by Whites. For example, Asian-male participation in the “management, professional and related occupations” category is better represented by 49% (percentage of their group) than 5.4% (percentage of the total employed) as reported by other BLS surveys[6]. 49% reflects that almost half of all working Asian-males are involved in management and professional occupations—an impressive percentage. 5.4% indicates only a small number of Asians are in management and professional occupations compared to the total working population—an unimpressive percentage—that does not account for the fact that the total number of Asians only represents 1/20^th of the US work force. Consequently, major minority groups are faring much better regarding labor force participation than the media and political activists often portray by using percentage of total employed statistics.

Income and Unemployment Inequities. While Jobenomics asserts that minority groups fare much better in the US labor force than generally perceived, Jobenomics also acknowledges that there are inequities that need to be fixed, especially in the Hispanic and Black subgroups.

According to the most recent US Census Bureau report[7], US median household income has fallen by 9% since 2007, hurting all Americans regardless of race or ethnicity. Today, the US Asian community maintains the highest median household income of $65,129, followed by Whites ($55,412), Hispanics ($38,624) and Blacks ($32,229).

Over the decades, income inequality has remained relatively the same between the races, collectively increasing during good times, and collectively decreasing over bad times. During the good times, income inequality was not a politically-charged issue since increasing household income provided a sense of well-being. Since year 2000, the US Employment-Population Ratio has decreased 9.4% with the greatest impact on the middle-class. During the last six years, the precipitous decline in household income significantly impacted the Black and Hispanic communities that were especially hard-hit during the Great Recession, largely due to the mortgage crisis and the erosion of middle-class jobs. As shown above, over the last three years, the Employment-Population Ratio has flatlined, causing considerable anxiety and discord regarding limited income opportunity.

Since the Great Recession, unemployment increased for all Americans, but the Black and Hispanic groups were hit the worst, with current unemployment rates[8] at 13.8% for Blacks and 9.6% for Hispanics, compared to 6.8% for Whites and 5.1% for Asians (not shown on chart due to limited historical data).

Youth unemployment is even more egregious, especially for Black youths aged 16 to 19 years old, which is 38.2% compared to 20.5% for Whites[9].

In summary, Jobenomics concludes that, institutionally, minority groups are not having a major issue with participation. The Asian minority group is doing quite well exceeding White participation in top paying occupations. While Black and Hispanic groups lag behind Whites in participation, they are not lagging by a great extent. On the other hand, Blacks and Hispanics are challenged by their concentration in lower labor categories, high unemployment rates and depressed household incomes.

Minority-Owned Businesses. From a Jobenomics perspective, the primary solution to enhancing minority labor force participation and increasing wealth in minority communities involves minority-owned business creation, which is growing at twice the rate of all US business. If America exploits this trend, millions of minority-owned businesses could be created providing many millions of jobs.

U.S. Census Bureau performs a Survey of Business Owners twice each decade. A survey was conducted in 2007 and the results released in 2011—the latest data available. A survey was conducted in 2012, but the results will not be released until 2015.

Highlights of the 2007 Survey of Business Owners [10] include:

In 2007, more than one-fifth (21.3%) of the nation’s 27.1 million firms were minority-owned.
In 2007, minority-owned firms numbered 5.8 million, up from 4.0 million in 2002, an increase of 45.5%—more than double the 17.9% increase for all US businesses. Receipts of minority-owned firms increased 55.0% to $1.0 trillion over the five-year period, compared with the 32.9% increase for all businesses nationwide.
Of the 5.8 million minority-owned firms, 766,533 had paid employees, an increase of 21.7% from 2002. These firms employed 5.8 million people, a 24.4% increase from 2002, and their payrolls totaled $164.1 billion, an increase of 42.2%. Receipts of minority-owned employer firms totaled $860.5 billion, an increase of 54.3% from 2002.
In 2007, minority firms with no paid employees (mainly self-employed businesses and partners of unincorporated businesses) numbered 5.0 million, an increase of 50.0% from 2002. These firms had receipts totaling $164.3 billion, an increase of 58.9%.
Black-owned businesses grew to 1.9 million firms in 2007, up 61% from 2002 - the largest increase among all minority-owned companies; and generated $135.6 billion in gross receipts, up 53% from 2002. Black-owned firms accounted for 7.1% of all US businesses and employed 921,032 persons.
The number of Hispanic-owned businesses totaled 2.3 million (8.3% of all US businesses) in 2007, up 44% from 2002. Receipts for Hispanic firms increased 55% to $343.3 billion.
Asian-owned firms grew 41% from 2002 to 1.6 million. Asian-owned firms continue to generate the highest annual gross receipts at $510.1 billion in 2007, increasing 56% from 2002.

Jobenomics believes that doubling or tripling minority-owned businesses from 5.8 million to 11.6 million or 17.4 million is very achievable within a decade—if American communities implement viable plans that emphasize highly-scalable small, emerging and self-employed business creation.

Jobenomics Minority-Owned Business Creation Initiatives. Over the last two years, Jobenomics met with minority leaders in dozens of cities to discuss minority-owned business, wealth creation and meaningful jobs creation. These cities include Harlem (NY), Washington DC, Atlanta, Detroit, Chicago, Phoenix, Fort Worth, Philadelphia, San Diego, Las Vegas, Honolulu, Greensboro (NC), Wilmington (DE), Roanoke (VA), Chester (PA) and Bridgeport (CT). What we learned was encouraging—even in the most financially depressed inner-cities.

It was encouraging to find a high degree of entrepreneurial spirit and willingness to create minority-owned business. However, most government and community leaders have relatively little business experience, especially with start-ups and self-employed businesses. To compensate for inexperience, they tend to look to Washington or big-business that has not produced any net new jobs in the last several decades. Jobenomics contends that the most reliable source of guidance resides in innovators and serial-entrepreneurs. Various governmental small business agencies and associations do an adequate job of counseling and providing grants, but have little expertise in mass-producing highly-scalable small businesses.

The Father of American Education, Horace Mann, stated that “education is the great equalizer of the conditions of men, the balance-wheel of social machinery.” While Jobenomics agrees, the educational paradigm in yesteryear was much different than today. The old paradigm, “get an education to get a job…get a better education to get a better job” simply does not work in today’s high-tech, slow-growth economy where middle-class jobs are increasingly outsourced overseas. Most citizens in inner-cities need basic skills as opposed to higher education. If 40% of college graduates have difficulty finding jobs, how can a high school dropout hope to find work?

From a Jobenomics perspective, basic skills include communication, tradecraft and business. For inner-cities, Jobenomics focuses first on business creation. Small businesses offer the fastest way out of poverty through employment for the unemployed. Every city should have a community-based business generator that mass produces highly-scalable businesses. Our second priority is tradecraft—a skill acquired through experience in a trade—with emphasis on skilled service businesses. The third area is communications. In a business sense, communications entails the ability to express and demonstrate one’s value-proposition.

Jobenomics Community-Based Generators (1) identify and train potential business leaders and business owners, (2) implement highly repeatable and scalable businesses with emphasis on service-providing businesses, (3) establish sources of start-up funding, recurring funding and contracts to provide a consistent source of revenue for new businesses, and (4) provide post start-up business support.

Many metropolitan areas have business incubators that are oriented to emerging high-tech and manufacturing businesses. These incubators are often located in affluent areas or high-tech corridors. Jobenomics offers a complementary concept that focuses on business generators that are oriented towards trade-level, service-providing businesses in economically-depressed areas. Rather than incubating innovative business opportunities one-by-one, a business generator mass produces highly-scalable, start-up businesses. When fully operational, the community-based generator will be capable of creating 1,000 new small businesses per year.

Jobenomics has three fledgling Jobenomics Community-Based Generator projects underway in College Park (Atlanta), Harlem (New York City) and Detroit. Jobenomics is in the process of establishing networks of local non-profit and educational institutions to identify entrepreneurial talent. Once identified, the Community-Based Generator will evaluate candidates via self-employment surveys (see initial self-employment survey at www.Jobenomics.com) and counseling to determine their suitability for business ownership and the type of business.

Following the evaluation phase, candidates will undergo a training, certification and implementation process. Classes will be taught by successful small business owners and entrepreneurs with expertise in startup business implementation. By the end of the program the clients will have:

An Employer Identification Number (EIN), incorporation (S-Corp, C-Corp or Limited Liability Corporation), and the essentials to run a fully functional company (accounting systems, business plans, legal/regulatory, branding/marketing/sales, financing, etc.).
A computer supplied with accounting, business planning and website/social networking systems. Training will also be provided including how to obtain appropriate accounting (e.g., bookkeeping and CPA), information technology, and sales/marketing/ advertising/branding support after graduation from the center.
Supplementary business systems (e.g., website, social networking, bank accounts, etc.) that will facilitate the promotion of the new business.
Understanding on how to access government grants and investment capital.
A network of entrepreneurial organizations and on-going business support.

Jobenomics founded eCyclingUSA™ (www.ecyclingUSA.com) as part of its green-jobs initiative and a way to fund community-based business generators in metropolitan areas. Each month, city managers give away millions of tons of whiteware (e.g., appliances) and other electronic waste (computers and televisions) that contain tens of millions of dollar’s worth of minerals (e.g., copper, aluminum, precious metals) that can be reclaimed, sold on the commodities market or used to develop local industries. eCyclingUSA technology is in operation in 60 plants across Europe. eCyclingUSA plans to implement 50 sites across the US and is committed to donating a minimum of 10% of its annual profits (between $1 and $3 million per year per site) to fund Jobenomics Community-Based Business Generators.

[1] US Census Bureau, Most Children Younger Than Age 1 are Minorities, 17 May 2012, http://www.census.gov/newsroom/releases/archives/population/cb12-90.html

[2] US Census Bureau, 2010 Census Briefs, Overview of Race and Hispanic Origin: 2010, March 2011, Table 1. Population by Hispanic or Latino Origin and by Race for the United States: 2000 and 2010, http://www.census.gov/prod/cen2010/briefs/c2010br-02.pdf

[3] US Department of Labor, Bureau of Labor Statistics, Labor Force Characteristics by Race and Ethnicity 2011, Report 1036, published August 2012 and updated 6 June 2013, http://www.bls.gov/cps/cpsrace2011.pdf

[4] Note: the BLS reports monthly on White, Black and Asian groups but not Hispanics. Consequently, this 2011 report provides the latest official US government “apples-to-apples” comparisons of all four groups.

[5] BLS, Median weekly earnings by race, ethnicity, and occupation, first quarter 2012, http://www.bls.gov/opub/ted/2012/ted_20120419_data.htm

[6] BLS, Household Data Annual Averages, Table 11, Employed persons by detailed occupation, sex, race and Hispanic or Latino ethnicity, Year 2012 (retrieved 12 Sep 2013), http://www.bls.gov/cps/cpsaat11.pdf

[7] US Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2011, by Carmen DeNavas-Walt, Bernadette D. Proctor and Jessica C. Smith, http://www.census.gov/prod/2012pubs/p60-243.pdf, issued September 2012

[8] BLS, Unemployment rate by age, race, and Hispanic or Latino ethnicity, January 2008–February 2013, http://www.bls.gov/opub/ted/2013/ted_20130312.htm

[9] BLS, Table A-2 Employment status of the civilian population by race, sex, and age, September 2013, http://www.bls.gov/news.release/empsit.t02.htm

[10] US Census Bureau, 2007 Survey of Business Owners, http://www.census.gov/econ/sbo/

Fastest Growing Occupations

Download PDF Version: Fastest Growing Occupations - 22 Oct 2013

22 October 2013

As discussed in the latest monthly Jobenomics Employment Report, 84.3% of all new jobs this decade have been created in four of the thirteen US industry groups. The fastest growing industry is Professional and Business Services with 2.131 million new jobs followed by Trade, Transportation and Utilities with 1.498 million; Education and Health Services with 1.385 million; and Leisure and Hospitality with 1.278 million for a grand total of 6.292 million new jobs. This report examines these four industry groups for the fastest growing occupations in terms of jobs added and growth rate this decade. This data is offered as a guide for those entering the labor force or planning a career.

Industry Employment Growth This Decade (10s)

Professional and Business Services. According to the BLS, Professional and Business Services supersector is part of the service-providing industries group and consists of these sectors: Professional, Scientific, and Technical Services (NAICS 54), Management of Companies and Enterprises (NAICS 55), and Administrative and Support and Waste Management and Remediation Services (NAICS 56). NAICS (pronounced “nakes”) is the North American Industry Classification System that is used by business and government to classify business establishments according to type of economic activity in the United States, Canada and Mexico. The following two charts show the number of jobs added and growth rate this decade for major occupations within the Professional and Business Services.

Trade, Transportation, and Utilities. According to the BLS, the Trade, Transportation, and Utilities supersector is part of the service-providing industries group and consists of these sectors: Wholesale Trade (NAICS 42), Retail Trade (NAICS 44-45), Transportation and Warehousing (NAICS 48-49), and Utilities (NAICS 22). The following four charts show the number of jobs added and growth rate this decade for major occupations within Trade, Transportation, and Utilities.

Leisure and Hospitality. According to the BLS, the Leisure and Hospitality supersector is part of the service-providing industries group and consists of these sectors: Arts, Entertainment, and Recreation (NAICS 71) and Accommodation and Food Services (NAICS 72). The following two charts show the number of jobs added and growth rate this decade for major occupations within Leisure and Hospitality.

Education and Health Services. According to the BLS, the Education and Health Services supersector is part of the service-providing industries group and consists of these sectors: Educational Services (NAICS 61) and Health Care and Social Assistance (NAICS 62). The following two charts show the number of jobs added and growth rate this decade for major occupations within the Education and Health Services.

Consumption-Based Economy

Download PDF Version: Consumption-Based Economy 2 Sep 2013

2 September 2013

The USA is a consumption-based economy and America is a consumption-driven society. Neither fact is necessarily good or bad. It is the way America has operated for a century. The issues at hand are (1) whether America can sustain high rates of consumption in an ever changing geo-political/economic environment, and (2) what are the consequences of a reduced consumption-based economy?

Consumption is an economic function that is defined as the value of all goods and services bought by people. Leading economists determine the performance of a country in terms of consumption level and consumer dynamics. The underlying theory of a consumption-based economy is that progressively greater consumption of goods is economically beneficial. Jobenomics believes that this theory is only partly true. Production, not consumption, is the true source of wealth. Production uses resources to create goods and services that are suitable for use or exchange in a market economy. If America wants a healthy economy, we need to create the conditions under which producers (businesses as opposed to governments) can accelerate the process of creating wealth for others to consume and finance future production.

To better understand the dynamics of our consumption-based economy, let’s first examine US consumption statistics, and then address consumption-based economy sustainability, potential consequences of reduced consumption, and Jobenomics recommendations.

US Consumption Statistics. The US is consumption-based society where spending and consumption of goods and services are essential to economic health. In America’s pre-consumer era, the US economy was based on agriculture and cottage industries where citizens produced what they needed and traded the rest. Non essential consumption was largely the privilege of an elite few. Over the last century, consumerism was introduced to the masses as part of the American economic equation. Today, consumption is no longer a privilege but a necessity. Increased consumption is necessary to keep the economy growing. Without increased consumption, the economy would falter.

To sustain a growing economy, government, financial institutions and corporations must motivate citizens to keep consuming to preserve our way of life. Modern-day Americans are programmed to be good consumers. It is estimated[1] that an average American child watches 20,000 TV commercials per year. By age 65, the average American watches 2 million commercials. We are programmed for mega-consumption for special occasions, like Christmas that evokes $80 billion worth of gift-giving. When an event, like 9/11 or the Great Recession of 2008-09, happens the federal government steps in to encourage consumption. The Monday following the 9/11 Trade Tower attacks, the White House encouraged American’s to continue shopping due to fears that Wall Street would falter if consumer confidence plummeted. At the advent of the Great Recession, the federal government implemented a series of bailouts, buyouts and stimuli to keep financial institutions and corporations afloat in order to stimulate our consumption-based economy. These federal stimuli continue today to the tune of $16.6 trillion (see http://jobenomicsblog.com/stock-markets-and-the-fed), which is in addition to the $3.5 trillion spent annually for federal goods and services.

International Comparison of Consumption as a Percent of GDP

According to The World Bank[2], the United States is the largest and most conspicuous consumption-based economy in the world. As shown, the US leads the world with 71% consumption as a percent of US gross domestic product (GDP, the sum of all goods and services produced in the US by Americans). Other Western economies average about 60%. Emerging economies average around 35%.

China, as true with many developing countries, depends on government-funded investment to encourage economic expansion. Chinese household consumption expenditure is 34% where government investment is approximately 54%. Most of this government investment comes from the Chinese government to large state-owned corporations that are granted easy access to capital for development of factories, real estate and infrastructure.

The overwhelming percentage of GDP is generated by personal consumption and expenditures as shown above. The US Federal Reserve System (the central bank of the United States) reports monthly[3] on the various components US GDP. For 2013, personal consumption and expenditures amounts to $11.4 trillion out of a total GDP of $16.0 trillion, or 71% of the total. Government consumption, expenditures and investments amount to $3.0 trillion, or 20% of the total. Private domestic investment (mainly businesses and real estate investments) accounts for $2.2 trillion, or 13%. The final component is net US imports/exports, which is a negative $500 billion (-4%) since foreign imports exceed US overseas exports in our consumption-based economy.

US personal consumption rose over the last seven decades as a percentage of US GDP—ranging from a low of 62% to a high of 71% today. It is interesting to note that the two recessions in the decade of the 2000s did not decrease the ever growing amount of consumer spending.

As estimated by the US Bureau of Economic Analysis[4], personal consumer spending has reached an all time high of $11.4 trillion in year 2013. From 1959 (earliest BEA records) to 1970, consumption of goods exceeded services. After 1970, services rapidly exceeded goods. Today, the US consumes $7.5 trillion worth of services and $3.9 trillion worth of goods. In other words, the US is a services-oriented, consumption-based society by a factor of almost 2 to 1.

Americans consume a vast variety of goods and services[5] with healthcare (21.0%), housing (18.8%) and recreation/entertainment (10.2%) topping the list. Surprisingly, Americans spend more on entertaining themselves (recreation and entertainment, 8.9%) than they do on groceries (food and beverages, 8%)—a sign of “conspicuous consumption”.

Conspicuous consumption is generally defined as spending on goods and services mainly for the purpose of displaying income, wealth or social status. Consumers naturally want the latest gizmos and to keep up with the “Jones”. However, advertising, easy money (credit) and federal stimuli encourage consumption practices that far outstrip our ability to pay. It is this inability to pay—both in government and the private sectors—that puts the American economy at risk.

America has a consumption conundrum. On one hand, the US economy is dominated by consumption (71%) that must be maintained in order for the economy to prosper. On the other hand, conspicuous, unneeded or unessential consumption without the ability to repay spiraling indebtedness risks defaults, ever higher interest rates, and bankruptcy. Approximately 50,000 businesses and 1 million individuals file for bankruptcy each year[6]. Bankruptcies in major cities, like Stockton, Harrisburg and Detroit, indicate that something is amiss.

Consumption-Based Economy Sustainability. Is our consumption-based economy sustainable? Jobenomics assesses the short-term outlook as favorable and the long-term outlook as unfavorable. However, the long-term outlook could be favorable if the American populace and their elected leaders exploit the advantages of the US labor force and solve a number of significant challenges facing US economic growth.

Americans have a number of advantages in regard to the global economy. Primary advantages include inertia, innovation, adaptability, natural resources, and the dollar as the world’s currency—all of which will sustain the US economy in the short-term.

In physics, inertia is defined as a property of matter to retain its momentum in the absence of an external force. The same is true of our consumption-based economy that has retained momentum over the last five decades as shown on the 1959 to 2012 Personal Consumption/Expenditures by Major Types of Product chart . Even the Great Recession of 2008-2009 caused only a temporary speed-bump in US personal consumption expenditures. Even with all its challenges, the US economy is still the largest, most vibrant and the most stable in the world.
Innovation is part of the American fabric. Historically, Americans have been the first to embrace disruptive technologies that transform life, business and the global economy. US innovators and entrepreneurs have revolutionized our society many times in the last century from the military-technological revolution in the 1950s/60s, to the information-technology revolution in the 1980s/90s and todays energy-technology revolution.
Americans adapt to change. Within the last 200 years, Americans transitioned from: pre-consumer to consumption-based, agriculturally-based to industrial-based, industrially-based to information technology-based, from dependence on goods to services, as well as rural to urban. In 1810, only 6.1% of Americans lived in cities. By 1910, 45.6% lived in cities. Today, 80.7% of all Americans live are urbanites.
Unlike most countries, America has ample resources. The most important resource is human. When we run short of human resources, America has been able to attract and retain foreign talent. The second most important resources is natural. We have abundant supply of arable land, water and energy. Our challenge is to husband these resources in an economically and environmentally balanced way.
The dollar is the world’s reserve currency. While there is a lot of talk about replacing the dollar with a new form of global currency based on a “basket” of currencies or commodities, the dollar should remain the world’s currency in near future. Being the world’s reserve currency, allows the US federal government to print and borrow money to manage its cash flow needs. This is not true of almost any other country on earth.

However, America has a number of significant challenges to include debt/deficits, fiscal/monetary policy, financial disruptions and demographics that could upend our consumption-based economy.

The US is now the greatest debtor nation in the world. Over-consumption caused US private and public debt (the total of all US government, households, corporations and financial institutions) to surge upward to $45 trillion, or 300% of US GDP. Eventually these debts will be reconciled via dollar devaluation, increased interest payments, defaults or high inflation.
The US Congress is responsible for fiscal policy (tax and spending) and the US Federal Reserve System is responsible for monetary policy (printing money and setting interest rates). As long as the US Congress spends $1 trillion more each year than it takes in taxes and the Fed continues to stimulate the economy at an average of $1 trillion a year, consumption will continue unabated with copious amounts of “easy” money. This rate of spending cannot last. Hopefully, the US economy will strong enough to operate on its own when government stimuli end.
Domestic financial disruptions, like recessions and periods of inflation, and occur frequently. Since WWII, the US averaged 1.7 recessions per decade. So far in this decade (2010 to today), the US has been recession-free mainly due to infusion of trillions of dollars worth of government stimuli. Inflation is also a major consideration. So far in 2013, inflation has averaged 1.5%, which is in the normal range. In 2008, prior to the Great Recession, it was 5.6%. In 1980, it was 14.7%. When government stimuli end, many fear that inflation will increase, perhaps significantly. The next recession and/or an inflationary spiral could be very deleterious to consumption.
Global financial disruptions caused by political, economic, military or social malfeasance could trigger changes to US consumption. Europe and Japan are in recession. Conflicts in the Middle East continue. Competition from China remains unabated. It is unlikely that a single global disruption will have a significant impact on US consumption. However, a global disruption may have a multiplying effect making a domestic financial disruption worse. Multiple or cascading global disruptions, especially with our key trading partners, would certainly have an adverse affect on the US economy.
US demographic trends signal reduced consumption. 78 million baby-boomers just began to retire. Retirees are generally fiscally conservative and less prone to large expenditures. The other demographic group that is buying less is the middle class. Since year 2000, the middle class has decreased by approximately 6%. In the same period of time, the number of able-bodied Americans that can work but choose not to work has grown by 20 million people to a total of 90 million, not including 70 million people that cannot work, out of a total population of 316 million.

Potential Consequences of Reduced Consumption. Depending how the US economy is managed or mismanaged, the consequences of reduced consumption can range from benign to malignant. The longer we wait to implement meaningful reforms to our long-term challenges the more severe the consequences of reduced consumption.

Unemployment is directly tied to consumption. One can roughly calculate the consequence a relatively minor drop of 5% in consumption and its impact on unemployment. A 5% reduction in the US $16 trillion annual GDP would precipitate a loss of approximately 20 million jobs ($16 trillion GDP x 5% = $800 billion/$40,000 annual median personal income = 20,000,000 jobs). Today, the US employs a total of 136 million citizens, so a reduction of 20 million jobs would equate to approximately 15% of the US work force. If the layoffs were focused on the poor and the lower middle class making an average personal income of $20,000, the numbers could double.

As shown on the International Comparison chart at the beginning of this article, a 5% reduction in GDP would still make the US highest consuming society tied with the UK at 66%. Given the volatility in today’s geo-political/economic environment, financial disruptions should be anticipated. Given the severity, duration and number of disruptions, a 5% (or greater) drop is certainly in the realm of the possible.

Jobenomics Recommendations. Jobenomics believes that the best way to mitigate the effects of a potential consumption downturn is to promote small business growth as opposed to massive stimulus packages oriented to government jobs, big business and large financial institutions. Since the beginning of this decade (2010s), small business produced 71% of all new jobs. Today small business employs 77% of the US labor force (see: Jobenomics Employment Report-August-2013).

Jobenomics also believes that a national initiative involving small, emerging and self-employed business creation would be an insurance policy against future economic downturns. The creation of 20 million new jobs via small businesses—the engine of the US economy—would mitigate potential reduction of 20 million jobs as calculated above.

In the 1970s, 1980s and 1990s, the US created an average of 20 million new jobs each decade and can do so again. However, this amount of growth will not transpire using traditional methods. Jobenomics believes that America needs to focus a model based on sustainability and self-sufficiency enabled by emerging information technologies and an improved national info-structure. Jobenomics advocates a transition from dependency on large urban institutions to more independent small rural and virtual business networks. This does mean that we abandon our current model but supplement it with alternatives that have the highest probability for scalability and growth.

Jobenomics is working on three highly-scalable, small business initiatives that could create millions of new jobs. These initiatives include: (1) a national effort for Generation Y to monetize social networks via a modernized info-structure, (2) a national direct-care effort to accommodate the aging and children via substantially increasing the number of women-owned businesses, and (3) a national effort to monetize waste streams via waste-to-energy and waste-to-raw materials that could rejuvenate depressed inner cities and the financially disadvantaged.

These three fledging initiatives are representative of the efforts of several hundred dedicated individuals—imagine what our nation could do writ-large.

[1] The Sourcebook for Teaching Science – Strategies, Activities, and Instructional Resources, Television Statistics, IV. Commercialism, http://www.csun.edu/science/health/docs/tv&health.html

[2] World Bank, Household final consumption expenditure, etc. (% of GDP), http://data.worldbank.org/indicator/NE.CON.PETC.ZS

[3] Federal Reserve, Flow of Funds Accounts of the United States, 2007-2013 Q1, Table F.6 Distribution of Gross Domestic Product, Page 12, 6 Jun 2013, http://www.federalreserve.gov/releases/z1/Current/z1.pdf

[4] US Department of Commerce, Bureau of Economic Analysis, Table 2.3.5U Personal Consumption Expenditures by Major Type of Product and by Major Function, 7 August 2013, http://www.bea.gov/itable/iTable.cfm?ReqID=12&step=1#reqid=12&step=3&isuri=1&1203=14

[5] US Department of Commerce, Bureau of Economic Analysis, Table 2.5.5 Personal Consumption Expenditures by Function, 7 August 2013, http://www.bea.gov/iTable/iTable.cfm?reqid=9&step=3&isuri=1&903=69#reqid=9&step=3&isuri=1&910=X&911=0&903=74&904=2004&905=1000&906=Q

[6] American Bankruptcy Institute, Annual Business and Non-business Filings by Year (1980-2012), Year 2012, http://www.abiworld.org/AM/AMTemplate.cfm?Section=Home&CONTENTID=66471&TEMPLATE=/CM/ContentDisplay.cfm

Income Inequality versus Opportunity

PDF Version: Income Inequality versus Opportunity 26 November 2012

26 November 2012

There is a significant difference between income inequality and income opportunity. Income inequality represents a rearward view on how much money a person possesses at a given time. Income opportunity represents a forward view of wealth potential and upward social mobility. Jobenomics recognizes income inequality as a starting point, but focuses on income opportunity, via business and job creation, especially at the base of America’s economic pyramid.

Income Inequality. Income inequality is defined as unequal distribution of household or individual income across the various participants (regional, social, racial, gender) in an economy. Income inequality slows economic growth, reduces social mobility, causes financial conflicts and creates discord. A survey for the World Economic Forum identified growing income inequality as one of the world’s most pressing issues for the next decade. After a period of wane, income inequality is growing again in America. US income inequality is often associated with income fairness and is now a dominant issue for policy-makers, media and social activists.

Much of the $6 billion dollars spent on the 2012 US election process focused on income inequality, especially rich (top 1%) versus middle-class and poor (the bottom 99%). Inflammatory rhetoric and political attack ads offered few solutions but exacerbated our political divide. A recent New York Times article[1], entitled Look How Far We’ve Come Apart, addressed the severity of the political divide in our country. Polarization between our two main political parties (shown below) has grown to the point of political paralysis.

The article also indicates that the US public is similarly divided,
almost to the extent that America was divided prior to the American Civil
War. The media are also polarized. America has reached a crossroads where the left wing no longer believes anything the right as to say, and vice versa. Now that the 2012 elections are history, the world is anxiously watching to see if America can reverse course and unite as a nation to address our strategic challenges. If we continue to focus on income inequality, America will continue to divide politically, socially and economically. The word “inequality” is
divisive, implying inadequacy and disparity. We cannot unify by using words, slogans and data that create dissension.

Conventional wisdom asserts (1) that income inequality is always bad, and (2) the United States is one of the most inequitable distributors of income on the planet. Both of these assertions are not accurate.

Income inequality is not a condition that we should tolerate, but is a myth that it is always bad. Throughout history, income inequality has been a powerful motivator. The American Revolution had issues of income inequality at its roots. Today, many of the greatest American success stories are about people from humble beginnings. Some degree of income inequality can be tolerated as long as a corresponding degree of income opportunity exists. Individuals and businesses would not innovate without the opportunity to reap rewards. When opportunity exceeds inequality, people are generally optimistic and motivated to succeed. However, when inequality exceeds opportunity, people are unhappy and motivated towards discordance. Unfortunately, America has entered a period where inequality exceeds opportunity, which places the US economy at risk.

Regarding the assertion that America is inherently inequitable, let’s take a strategic view of income inequality using official US government data, which is footnoted for the reader. Household income is generally used as the standard measure of income wealth by US government agencies. US household income includes the income of the householder and all other individuals 15 years old and over in the household. Household income is defined as income received on a regular basis not including capital gains or non-cash benefits (food stamps, health benefits, subsidized housing, and most other forms of welfare or entitlement benefits). “Median” household income divides the total number of households and families (including those with no income) into two equal parts.

According to the US Census Bureau, 95.7% of US households (multiple incomes) make less than $200,000 and 49.8% make less than $50,000. $50,000 represents the median US household income. The US poverty line is approximately $15,000 depending on the number of people in the household. These groups are usually defined as “middle-class” or “poor”.

The “the rich” are usually defined by personal income categorized in percentiles: top 5%, top 1%, and the ultra-rich. To qualify for an entry level position in the top 5%, a person needs to earn an annual income of $150,000. $340,000 is needed for the top 1%. An ultra-rich person in the top 0.1% starts at $1.5 million. An ultra-rich person in the top 0.01% starts at $8 million.

US median household income has fallen substantially this decade—the first such decline since the Great Depression in the 1930s. The Median US Household Income chart, from the 2012 US Census Bureau report[2], shows that median US household income started decreasing prior to the Great Recession. In 2007, the median US household income for all races peaked at $54,489. In 2011, it was $50,054, for a loss of $4,435, or 9%. All races suffered a decline over the same period, but the US Asian community continues to have the highest median household income of $65,129, followed by Whites ($55,412), Hispanics ($38,624) and Blacks ($32,229). Over the decades, income inequality has remained relatively the same between the races, collectively increasing during good times, and collectively decreasing over bad times. During the good times, income inequality was not a politically-charged issue since increasing household income provided a sense of well-being. During the last five years, declining household income has produced anxiety and discord.

The US Federal Reserve reports[3] on income inequality using the Income Gini Ratio (also called the Gini Index or Gini Coefficient) by race. The Gini Ratio is defined as a measurement of income distribution that ranges from 0, representing perfect equality, to 1, representing prefect inequality. As shown, Black Americans suffer the worse inequality within their own race. In other words, the distance between rich and poor within the Black community is greater than the distance in other races. The Hispanic community is the most homogeneous in terms of household income. Whites and Asians are in the middle with the Asian community having volatile swings during the decade.

A number of international organizations, like the World Bank and International Monetary Fund, use the Gini Ratio to define income inequality among nations. The Global Income Inequality chart (above) was created by Jobenomics using US Central Intelligence Agency data listed in their widely-accessed World Factbook’s Distribution of Family Income-Gini Index[4], which was compiled by the CIA using data from various international institutions. As far as global income inequality, the United States ranks slightly above average. The world’s worst income inequality is in emerging and totalitarian countries. Industrial and democratic countries are much more equitable in terms of income inequity. Globalization has narrowed the income inequality between nations but has exacerbated income inequality within nations due to global competition, international supply chains, global capital markets, and new information technology.

The data that gets most political and media attention is from the US Census Bureau’s Income Inequality Historical Tables[5]. The Census Bureau reports historical income inequality data in current dollars (not adjusted for inflation) and inflation adjusted dollars.

The US Historical Income Inequality chart was created by Jobenomics using Census 2011 dollars (adjusted for inflation) over the last 45 years. Over the last 4 ½ decades, the bottom 95% of US households have not made significant income gains. The top 5% average household income increased from $111,866 in 1967 (note: unadjusted 1967 household income for the top 5% was $19,000) to $186,000 in 2011 for a gain of 66%, or 1.5% per year— significant but certainly not great. To get to great numbers, one must use top 1% or top 0.1% data that is addressed below.

Here is the same chart showing current dollars that are not adjusted for inflation. In current dollars the top 5% increased their average household income by 879% ($19,000 in 1967 to $186,000 in 2011) as opposed 66% ($111,866 in 1967 to $186,000 in 2011) using 2011 Dollars that were adjusted for inflation. Jobenomics believes that inflation adjusted dollars give more of an apples-to-apples comparison, than non-adjusted current dollar comparisons.

Jobenomics created the Top 1% chart using the most recent bipartisan US Congressional Budget Office report[6], updated August 2012 (note: the US Census Bureau does not report on the top 1%). The chart shows that the top 1% far exceeds all other taxpayer incomes. In 2009 Dollars, the top 1% earned an average after-tax income of $886,700 down from $1,120,500 a year before the recession. The CBO also reports that there are 1.1 million top 1% households out of a total of 117.6 million US households, and that their share of total after-tax income was 11.5%. In other words, the top 1% represents 1% of all households and earns 11.5% of total US income.

There is no US government data that regularly reports on ultra-rich income. However, much antidotal data is available. The average CEO of the top US companies make $13 million per year, not counting stock options. By some accounts, the top 25 hedge fund managers make as much as all the top S&P 500 CEOs. These managers make billions, not millions, per year. From a global perspective, while Americans consider millionaires and billionaires to be rich, there are many areas of the world where personal wealth is measured in billions and trillions. In oil rich Arab nations, baby-sheikhs (20 year olds) are worth tens of billions of dollars and their fathers are trillionaires.

The 2012 presidential campaign debated the merits of increased taxation on the wealthiest American. Using Congressional Budget Office data[7], if taxes were increased by 5% on the top 1%ers, as requested by President Obama, approximately $60,985 more would be paid by each of the 1.1 million 1%ers. The net result would be approximately $69 billion dollars in new tax revenue, which is a relatively insignificant compared to $1 trillion annual deficit spending. Since $69 billion is only 7% of $1 trillion, the other 93% would have to come from increased taxes on the middle-class or reductions in spending. If taxes were increased all Americas in the top 20%, the net result would be $264 billion, or 25% of our annual spending deficit. It should be noted that the lower end top 20%ers (81^st to 90^th percentile) do not feel that they are wealthy, especially if the average $131,700 household income is a dual income family (e.g., husband and wife) each earning $65,850.

Income Opportunity. Income opportunity involves money that people can earn as opposed to money that they have. The term opportunity implies favorable conditions or prospects in order to attain advancement or success. Today, the American dream of upward mobility, fairness and optimism has been shaken in the wake of a Great Recession, chronically high unemployment and a stagnant economy.

Income opportunity is directly influenced by socio-economic mobility. Socio-economic mobility is the movement of an individual or group from one income level to another. Socio-economic mobility can be upward or downward. In America, with a few exceptions, mass upward socio-economic mobility has been the general trend since the creation of the United States. Most people that enter US workforce from high school or college move from initial lower paying jobs to higher paying careers. Those that dropout of school or society are likely to entrench themselves in the lowest income quintile with much lower mobility. While welfare and unemployment payments provide a safety net for those in the lowest quintile, these payments tend to trap these same individuals in low quintiles by eroding their socio-economic mobility. The longer a person is out of the workforce, the harder it is for that person to get a meaningful job. Socio-economic mobility is also influenced by education and social status. A presentation by Assistant Treasury Secretary Jan Eberly at the 2012 Economic Measurement Seminar produced an insightful graphic on intergenerational socio-economic mobility[8]:

According to Sec. Eberly, higher education is critical for economic mobility. Without a college degree, children born in the bottom income quintile have a 45% chance of remaining there as adults. With a degree, they have a roughly equal chance of attaining each income quintile, which means an 80% chance of being in a higher income quintile than their parents.

While America has always been know as the “land of opportunity”, the Great Recession and chronically high unemployment has eroded socio-economic mobility for those at the base of America’s economic pyramid. A 2012 study[9] by the Economic Mobility Project of the Pew Charitable Trusts states while “Eighty-four percent of Americans have higher family incomes than their parents did….Those born at the top and bottom of the income ladder are likely to stay there as adults. More than 40 percent of Americans raised in the bottom quintile of the family income ladder remain stuck there as adults, and 70 percent remain below the middle”.

Jobenomics believes that high school dropout rates, especially in the inner cities, is symptomatic of a greater problem—the lack of income opportunity. Jobenomics is working with local leaders in Detroit, Harlem, Atlanta, Washington DC and a number of smaller communities, all of whom say that high dropout rates are directly related to the lack of jobs. Why graduate from school when meaningful opportunities are not available? Jobenomics defines meaningful opportunities more in terms of careers as opposed to jobs. To most young people, minimum wage jobs are not meaningful as compared to income opportunities derived from illicit employment or government welfare benefits. Consequently, Jobenomics emphasizes community-based business generators in order to mass produce thousands of micro-businesses in the inner city. Micro-businesses provide meaningful income opportunity.

Many Americans feel that Washington policy-makers can fix our problems. Jobenomics disagrees for a number of reasons. First, a stagnant economy as well as a deeply divided citizenry makes political consensus-building difficult. Second, the biggest challenges for improving income opportunity are beyond Washington’s reach. Thirdly, global competition in the digital age levels the playing field for 6 billion other people around the world who want income opportunity and are often more motivated to strive to get it. While Washington has an important support role, it is up to the private sector to create businesses and jobs.

Since the beginning of this decade, small business has created 66% of all new jobs in America.

A recent McKinsey report[10] entitled Restarting the US Small-Business Growth Engine accurately describes small business as the engine of US economic growth with emphasis on “high growth” small businesses. The McKinsey article states that “a subset of small businesses—high-growth ones—creates the vast majority of new jobs. Seventy-six percent of these high-growth firms are less than five years old. The 1 percent of all firms that are growing most quickly (fewer than 60,000 in all) account for 40 percent of economy-wide net new job creation.” The biggest challenge for the McKinsey model is picking winners. It is hard to identify the next generation serial entrepreneurs, like Bill Gates (Microsoft), Steve Case (AOL), Mark Zuckerberg (Facebook) and Meg Whitman (eBay). Therefore, the McKinsey model focuses on small businesses that already have established themselves with potentially high growth products or services. McKinsey also advocates big business and government assistance to help emerging businesses grow rapidly and mass produce jobs.

Jobenomics focuses on “highly scalable” start-up businesses that are unlikely to receive significant government and big business support. Jobenomics is currently working on the establishment of a dozen community-based business generators that will mass produce small and self-employed businesses that can be replicated easily. Self-employed businesses (both incorporated and unincorporated) are a good example of the type of highly scalable business that can be mass produced in order to create millions of jobs. The Jobenomics model focuses on individuals that have a yearning to start a business. Jobenomics is currently concentrating on four demographics: inner city minority groups (service-providing businesses that focus on journeyman skill sets), women-owned businesses (direct-care, direct-sales and education/training businesses), Generation Y (start-up businesses that focus on monetizing social networks and the internet) and veterans-owned businesses (businesses that specialize in defense industry related occupations). These demographics have the potential for 10s of millions of jobs and millions of new businesses that can be replicated across America.

In conclusion, income distribution is relatively well divided in the US even though a majority of Americans believe otherwise. So why are Americans so upset about income inequality when official government data indicates otherwise? For America to prosper, the answer lies with income opportunity, not income inequality.

Today, too few are paying for too many. Only 32% of our population financially supports the rest of our population. We have a moral obligation to provide a safety net for the 23 million looking for work and the 70 million that cannot work. We also have an economic imperative to grow the private sector work force that currently consists of 102 million people. The Jobenomics goal is 20 million new private sector jobs by year 2020. The Jobenomics national grassroots plan is designed to unite a divided nation through business and job creation with emphasis on small, emerging and self-employed businesses in the middle and bottom of America’s economic pyramid. Providing meaningful income opportunity is essential to sustaining the American dream of mass upward social mobility.

[1] The New York Times, The Opinion Pages, Look How Far We’ve Come Apart, by Jonathan Haidt and Marc J. Hetherington, http://campaignstops.blogs.nytimes.com/2012/09/17/look-how-far-weve-come-apart/, 17 Sep 12

[2] US Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2011, by Carmen DeNavas-Walt, Bernadette D. Proctor and Jessica C. Smith, http://www.census.gov/prod/2012pubs/p60-243.pdf, issued September 2012

[3] US Federal Reserve Bank of St. Louis, http://research.stlouisfed.org/fred2/graph/?id=GINIBAF,GINIWANHF,GINIHARF

[4] CIA World Factbook, Distribution of Family Income-Gini Index, https://www.cia.gov/library/publications/the-world-factbook/fields/2172.html

[5] US Census Bureau, Historical Income Tables: Income Inequality, H-1 All Races, http://www.census.gov/hhes/www/income/data/historical/inequality/

[6] Congressional Budget Office, Distribution of Household Income (Supplemental data spreadsheet), updated 10 August 2012, http://www.cbo.gov/publication/43373

[7] Ibid

[8] US Department of the Treasury, Remarks of Assistant Secretary Jan Eberly before the National Association of Business Economists (NABE), 2012 ECONOMIC MEASUREMENT SEMINAR, 31 July 2012, http://www.treasury.gov/press-center/press-releases/Pages/tg1662.aspx, and http://www.treasury.gov/press-center/press-releases/Documents/View%20the%20charts%20shared%20with%20NABE%20today.pdf, Page 6

[9] Economic Mobility Project of the Pew Charitable Trusts, Pursuing the American Dream: Economic Mobility Across Generations, 9 July 2012, http://www.pewstates.org/research/reports/pursuing-the-american-dream-85899403228

[10] McKinsey & Company, McKinsey Quarterly, “Restarting the US small-business growth engine”, by John Horn and Darren Pleasance (Strategy Practice), November 2012, http://www.mckinseyquarterly.com/Strategy/Growth/Restarting_the_US_small_business_growth_engine_3032

Manufacturing Industry Forecast

Executive Summary: US manufacturing is not likely to employ significantly more Americans than it currently employs.

Overview: Manufacturing is a vital component of our economy. Unfortunately, Americans have unrealistic expectations regarding the role of the manufacture sector in our economic recovery as well as jobs creation. The American economy is dominated by service-providing industries that employ the 86% of all Americans. Manufacturing (part of the goods-producing sector) employs only 9%. Correspondingly, American policy-makers and opinion-leaders do disservice to the American public by heralding manufacturing over other industries. Reasonable rates of employment and economic recovery can only be achieved via a balanced approach to resourcing and supporting all growth industries. Most Americans understand how we transitioned from an agriculturally-based society to an industrial-based society, but have not come to terms with the ramifications of a postindustrial, services-based, internet-empowered society that is significantly less dependent on domestic manufacturing.

Total US Employment. Out of a total population of 314 million, America employs 133 million people in three sectors: service-providing industries, goods-producing industries, and government services. 115 million Americans (including government employees) are employed in service related jobs, which equates to 86.3% of all working Americans. The service-providing sector employs 93 million Americans. Government (federal, state, local) is the second largest employer at 21.9 million. The goods-producing sector is the smallest with 18.3 million. Manufacturing is the largest goods-producing industry that employs 11.97 million, which equates to 9% of all working Americans or 3.8% of our population. At 9%, it is difficult to assert that the US is an industrial or manufacturing-based society. With 86% in service related jobs, America is better defined now as a postindustrial, services-based country.

Recent US Manufacturing Employment Statistics. US manufacturing employment decreased 39% from its pre-recession high. If adjusted for population growth, the declination is 55%. Over the last two years, manufacturing employment has increased 4% but is now trending downward. Jobenomics predicts that the entire US manufacturing sector (durable and nondurable goods) will not produce significantly more jobs than it currently does.

In 1946, 11.9 million Americans were employed in manufacturing. By 1979, manufacturing grew to 19.5 million. Then the decline began. Over the last three and a half decades, manufacturing has declined 39% to 11.97 million today. Since the post-Great Recession low in January 2010, manufacturing has grown by approximately 500,000 people. This is good news, but insufficient evidence to believe that a manufacturing renaissance is underway.

The US manufacturing sector is comprised of durable and nondurable goods. Durable goods consist of machinery, appliances or equipment that are not easily consumed or destroyed during use and lasts for over three years. Nondurable goods are items, such as food and apparel that are used up quickly or purchased infrequently.

Durable goods have suffered a 39% decline from the peak in 1979 and now employ 7.5 million people or 63% of the total manufacturing sector. From its post-recession low in January 2010, durable goods have added approximately 500,000 jobs or a gain of 7%. Much of this gain can be attributed to generous federal government stimuli and bailouts (e.g., the auto industry).

There are 10 durable goods industries or subsectors as defined the US Department of Labor’s Bureau of Labor Statistics (BLS) as shown above. The transportation/motor vehicles/equipment sector is the largest subsector with 1,468,000 employees.

The American public generally associates the automotive industry with this durable goods industry. However, according to the BLS[1], the entire US automotive industry (both foreign and domestic manufactures) only employs only 772,000 people in motor vehicles and parts manufacturing, or 10% of the durable goods sector, or 6% of the manufacturing sector, or 1% of all working Americans, or 0.2% of all American citizens. These percentages are offered not to diminish the importance of auto industry manufacturing, but rather to emphasize that there are a host of other industries and sectors that are equally critical to the American economy.

One could argue that the auto industry supports a vibrant retail trade (services-providing industry) with 1,716,500[2] Americans employed by motor vehicle and parts dealerships as well as another 815,000 independent automotive repair and maintenance personnel. This is true. Automotive manufacturing supports a large indirect jobs tail. However, it is also true that US automotive manufactures are no longer the dominant vehicle provider in America. In September 2012, out of a total of 1,188,865 light vehicle sales[3] made in America, only 44% (538,752 vehicles) were manufactured by American auto manufactures (GM, Ford and Chrysler). Consequently, foreign automotive manufacturers now have a longer indirect jobs tail in the US than American auto manufacturers. This large indirect tail of dealer and maintenance jobs would exist even if the Big 3 did not. This is not meant to imply that the Big 3 and domestic manufacturing is not important. It is vitally important. The point is that automotive manufacturing, as well as other durable and nondurable goods manufacturers, may not be the job creators that most Americans expect. Our limited resources should be invested in industries that have the most economic and jobs creation potential.

Nondurable goods have suffered a 38% decline from the peak in 1979 and now employ 4.5 million people or 37% of the total manufacturing sector. From its post-recession low in October 2010, nondurable goods have added an insignificant number of new jobs.

Coincidently, the largest nondurable goods industry, food manufacturing, employs exactly the same number of people (1,468,000) as the largest durable goods industry, transportation, and twice as much as the entire automotive manufacturing industry. In addition, as shown above, food manufacturing was much more stable after the Great Recession and did not need stimuli, bailouts and buyouts from the US government and its taxpayers.

Industry Employment Growth. As stated previously, manufacturing employs 9% of all working American’s, but how has it grown compared to other US industries?

Since the beginning of this decade (1 January 2010) with a growth rate of 10.5% over this 32 month period, the manufacturing sector is the fifth best jobs generator out of thirteen US sectors. This is a welcome development after decades of steady decline. Will this growth continue in the future? Probably not.

The latest Manufacturing ISM Report on Business[4] data (depicted above) shows that US manufacturing contracted in two of the last three months. This is the first contraction since June 2009 at the end of the Great Recession. Since the Great Recession, US manufacturing trended upward, leveled and is now trending downward. Note: the Manufacturing ISM Report index uses values over 50% as positive (expanding) and values under 50% as negative (contracting).

This downward trend follows general corporate trends like declining corporate earnings that are predicted to go negative in the first quarter of 2013[5] after positive growth in the eleven previously positive quarters (see posting entitled, Uncle Sugar High). To a large extent corporate earnings and manufacturing recapitalization are inextricably linked. Corporations are less likely to invest and hire with poor earnings.

In addition, the World Economic Forum (WEF)’s annual forecast[6] shows a rapid downward trend in American global competitiveness after being #1 for years. The WEF is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders. Out of 144 countries, the WEF ranks the US #1 in market size, #6 innovation, #10 business sophistication, #8 higher education and training, #23 goods market efficiency, #34 primary education, and #111 macroeconomic environment (i.e., low public trust in politicians and a perceived lack of government efficiency). In 2006, the United Kingdom was #2, but disappeared thereafter. Hopefully, the US will reverse the downward trend. Competitiveness is paramount to success.

In the long-term, Jobenomics predicts that the manufacturing industry will not produce a significant number of new jobs for the following reasons:

While the recent uptick in manufacturing jobs over the last few years has been slightly positive, the headwinds of the last three decades have not significantly abated.
Emerging economies with lower labor rates, less regulations, better technical skills, and greater government underwriting will continue to be competitive in global manufacturing.
US corporations will continue to outsource jobs to emerging economies despite government pressure and incentives to re-shore jobs. Many of the domestic job openings that require hi-tech skills will remain unfilled.
The political ideological divide will prevent any meaningful pro-business policies, or significantly reduce the regulatory environment.
The advent of the third industrial revolution has shifted the manufacturing equation from labor-intensive to technology-intensive and from jobs-heavy to jobs-lite with a premium on highly skilled labor as opposed to manual labor.

The American public generally understands the first four reasons even though they may be hard to accept. Political rhetoric about streamlining the regulatory environment, increasing US exports, creating reciprocal trade agreements, imposing tariffs on cheaters, and lowering corporate taxes is good for elections but is not likely to be enacted nor achieved in the near future. Free trade in a global marketplace will likely trump any attempts for protectionist legislation. Mandatory entitlement programs will continue to drive government spending which is dependent on individual and corporate taxes. In addition, corporations will, and must, continue to deliver profits to shareholders. US multinational corporations will continue to expand overseas in emerging economies as opposed domestic expansion in the mature US market. Finally, American workers, now the most productive workers in the world, will continue to produce more with less—requiring less labor per unit produced.

The third industrial revolution (reason #5) may be the biggest reason for a “jobs-lite” manufacturing future. The first industrial revolution (IR1) took place in the late 18^th Century with the mechanization of industry starting with the cotton gin. IR1’s labor force consisted of high-touch, non-mass production, manual labor, which created the infamous sweat-shops in the 19^th Century. The second industrial revolution (IR2) started in the early 20^th Century with the advent of Henry Ford’s moving assembly lines. IR2’s labor force consisted of high-touch manual labor augmented by machinery designed for mass production. The third industrial revolution (IR3) is currently underway. IR3’s labor force consists of highly-skilled, hi-tech laborers who support digitally automated factories. Each revolution has caused a reduction in low-skilled, high-touch jobs.

The third industrial revolution is powered recent technological advances including: artificial intelligence, high-speed broadband networks, robotics, web-based services, rapid prototyping (such as 3D computer-aided design and 3D printing), as well as innovative manufacturing processes that include better business process reengineering, global supply chain management, customer relationship management and enterprise risk management. Consequently, most of the jobs will no longer be on the blue-collar factory floor but in white-collar offices. Premium jobs will be for professional designers, engineers, logisticians, IT specialists and the like. Old fashioned repetitive manual labor jobs are being eliminated or outsources overseas. Traditional support staff jobs are also being eliminated or accomplished online.

In conclusion, manufacturing is vital to the US economy but is not likely to provide a significant amount of jobs to reach the Jobenomics goal of 20 million new jobs by year 2020. 20 million new jobs is a reasonable goal considering that the US produced 20 million new jobs in previous decades and that 20 million new jobs are needed for new workers (16 million per decade) and to decrease unemployment rates below 6% (4 million). As such, it is imperative that the American public, policy-makers and opinion-leaders properly promote and support manufacturing in relation to the other twelve US employment sectors. While major US durable goods manufacturers (such as automotive and aerospace) produce products that are a source of national pride, it is equally important to support less glamorous industries and businesses (especially small, emerging and self-employed) that are the engine of our economy and have the greatest jobs creation potential.

[1] Department of Labor’s Bureau of Labor Statistics, Automotive Industry: Employment, Earnings, and Hours, http://www.bls.gov/iag/tgs/iagauto.htm, July 2012

[2] Ibid.

[3] The Wall Street Journal, Auto Sales, Sales and Share of Total Market by Manufacturer, http://online.wsj.com/mdc/public/page/2_3022-autosales.html, retrieved 3 Oct 2012

[4] Institute for Supply Management, Manufacturing ISM Report On Business , September 2012, http://www.ism.ws/ismreport/mfgrob.cfm

[5] The New York Times, Earnings in United States Are Beginning to Feel a Pinch, 16 September 2012, http://www.nytimes.com/2012/09/17/business/earnings-outlook-in-us-dims-as-global-economy-slows.html?nl=todaysheadlines&emc=edit_th_20120917

[6] World Economic Forum, Global Competitiveness Report 2012-13, http://www.weforum.org/issues/global-competitiveness

Construction Industry Forecast

Highlights of this posting:

The US construction industry was one of the hardest hit industries in the Great Recession and is the second worst industry in terms of employment of the ten private sectors industries.
Overall construction industry employment is down -29% with the residential sector down -42%, nonresidential (commercial building) down -23% and the non-building publically financed infrastructure/heavy construction/civil engineering sector down -18%. The official unemployment rate for this industry is 14.2% as of June 2012.
Overall construction industry spending is down from peak -32% with the residential sector down -62%, nonresidential (commercial building) down -29% and the non-building publically financed infrastructure/heavy construction/civil engineering sector down -16%.
Jobenomics forecasts that:
- The residential construction industry will not significantly increase in the foreseeable future.
- The commercial industry will not increase significantly in the US but has potential international opportunities in emerging markets.
- The publically funded infrastructure/heavy industry/civil engineering sector will not increase significantly due to federal/state deficits and debt.

Over the last three decades, the US construction industry grew from approximately 4 million employees to peak employment of 7.8 million in April 2006 when the decline began. The Great Recession of 2008/09 accelerated a rapid decline. Today, the US construction industry has 5.5 million employees—a decline of -29% from the peak six years earlier. As of June 2012, the Bureau of Labor Statistics (BLS) reports that the US Construction Industry has an unemployment rate of 14.2% compared to a national average of 8.2%[1].

From the employment peak, residential construction lost -42%, commercial construction -23% and heavy construction lost 18%.

As a percentage of total US employment, the construction industry now represents only 4.2% of the US workforce.

Since the beginning of this decade (‘10s), all private sector industries have been growing with the exception of Information (-4.1%) and Construction (-1.8%). The Information (e.g., publishing, broadcasting) industry’s decline is largely due to the Internet, whereas the Construction industry decline is largely due weakness in the residential housing and commercial building sectors.

The US construction industry can be characterized by type or labor category. By project type, according to the Department of Labor, this industry is 48% nonresidential commercial, 37% residential and 15% heavy & civil engineering (often called infrastructure or nonbuilding). By labor category, this industry is 63% specialty trade contractors, 22% construction of buildings and 15% heavy and civil engineering.

The Construction Industry is classified by the North American Industry Classification System as NAICS Code 23, shown above. The NAICS Association reports that NAICS Code 23 consists of 1,466,475 million businesses[2]. Consequently, by dividing the number of businesses by the total number employed (5.5 million), the US construction industry can be characterized largely as an industry of small firms with an average of 3.8 employees. According to the Professional Builder’s 2011 Housing Giants Rankings , the top 225 US Home Builders accounted for only 19% or $48.6 billion out of the $254 billion spent on residential construction. The top 10 US residential home builders accounted for only 9% or $22 billion of the total.

The Federal Reserve Bank of St. Louis (FRED) provides a view of US construction spending. Total construction spending peaked in March 2006 at a total of $1.21 trillion and hit a 15-year low in March 2011 at $762 billion, a -37% decline. Today (June 2012), total construction spending is $820, a +8% increase from the 2011 low.

The residential construction industry peaked in March 2006 at $414 billion (two years before the Recession) and hit a 20-year low in September 2010 at $228 billion, a -66% decline. Today, it is $256 billion, up +12% from its low in 2010 but still down -62% from peak.

The nonresidential (private sector commercial building) construction industry peaked in January 2008 at $414 billion and hit a 15-year low in 2011 at $244 billion, a -41% decline. Today, it is $293 billion, up +20% from its low in 2011 but still down -29% from peak.

Public construction (heavy construction and civil engineering) spending peaked in July 2009 at $323 billion and hit its current low today at $271 billion, a -16% decline. As the chart indicates, the federal government stimuli (i.e., politically-oriented, shovel-ready, infrastructure projects) increased public construction at the beginning of the recession ($294 billion in January 2008), which lifted this sector +10% to its peak latter in the recession. After the recession, government spending has decreased significantly.

Jobenomics studies US and international economic trends. Jobenomics assesses the following probabilities regarding the overall US economy: 30% chance that the economy will improve, 30% that it will continue to muddle along, and 40% it will get worse, or perhaps much worse, depending on the severity of potential financial disruptions. For a more detailed discussion on why Jobenomics assigns these percentages to the US economic future read Jobenomics (the book) or visit our website (www.Jobenomics.com). Since the US construction industry is one of the bottom performers of all US industries, Jobenomics assesses the chances that the overall US construction industry will not improve significantly in the foreseeable future with the exception of the commercial sector that has opportunities in foreign markets. Jobenomics forecasts that:

The residential construction industry will not significantly increase in the foreseeable future.
The commercial industry will not increase significantly in the US but has potential international opportunities in emerging markets.
The publically funded infrastructure/heavy industry/civil engineering sector will not increase significantly due to federal/state deficits and debt.

Residential Construction Industry. Jobenomics assesses the chances that the US residential construction industry will improve at 10%, remain stagnant at 20%, and will worsen at 70%. This assessment is a nationwide assessment. However, like real estate, the residential construction industry is largely local. Residential traditionally has been the driving-force in the construction industry. However, this may no longer be true.

This chart shows the total number of privately owned residential new starts since the middle 1950s. The January 2006 peak almost reached the previous peak in January 1972. Then the US housing bubble burst which contributed significantly the Great Recession two years later. From the peak in 2006, the number of residential new starts plummeted a staggering 79% to historic lows by April 2009. Since April 2009, the number of new homes increased from 478,000 to 717,000 today, a +50% increase but still -68% from the 2006 peak.

For the foreseeable future, Jobenomics predicts that new starts will not appreciate at a significant rate, due to the following factors:

1. Slow growth of the overall economy

2. Chronically high unemployment and a shrinking middle class

3. Distressed selling due to:

a. Foreclosures

b. Delinquent mortgages

c. Underwater mortgages

d. Strategic defaults

4. Changing attitudes on home ownership (more people renting)

Other leading economics agree with this Jobenomics assessment. According to Yale economics professor Robert Shiller, the co-creator of the Standard & Poor’s/Case-Shiller home price index, “I worry that we might not see a really major turnaround in our lifetimes” for the residential real estate market[3].

Nonresidential & Nonbuilding Construction. Jobenomics assesses the chances that the US nonresidential and nonbuilding construction (infrastructure, heavy and civil engineering) industries will improve at 20%, remain stagnant at 30%, and will worsen at 50%. These two sectors did not suffer to the extent that their residential counterparts did during the housing bubble burst and Great Recession. In addition, they were the beneficiaries of more government stimuli (e.g., “shovel-ready” infrastructure projects) than residential. Assuming no major domestic or foreign disruptions to the US economy, Jobenomics believes that worst may be over for the nonresidential and nonbuilding construction industries. Unlike residential construction, the nonresidential and nonbuilding construction industries have upside potential in the international marketplace that could offset downward trends in domestic public sector funding.

Most construction analysts predict that the US government public sector funding growth will resume as it has done in the past. Jobenomics disagrees due to the magnitude of public debts and deficits. A quick look at the largest government agency, the US Department of Defense, is indicative of what will happen to other government agencies including federal, state and local government agencies. The US Department of Defense’s Military Construction Budget is dropping precipitously due to budget constraints. The DoD’s Fiscal Year 11 (actual), FY12 (actual) and FY13 (planned) construction budgets (TOA, total obligation authority) where $20.1 billion, $13.9 billion and $11.2 billion respectively. The difference between FY11 and FY13 is $8.9 billion, a decline of 44%.

McGraw-Hill Construction, a mainstay in construction industry forecasting, predicts that upsides in private sector construction financing (plants, warehouses, hotels, and commercial buildings) will be offset by large declines in public sector construction projects funded by municipal, state and federal governments. New public sector projects like school, healthcare, electric utility and other public works programs (bridges, parks, roads) are problematic due to fiscal constraints at all levels of government. In addition, new industry entrants face challenges with access to capital. Strict lending standards will continue to exclude many general contractors from being eligible for loans.

Compared to their residential counterparts, larger corporations play a much larger role in the nonresidential and nonbuilding construction sectors. There is some debate on the size and revenues of the major US construction corporations due the fact that many are private corporations. However, the ENR (Engineering News Record) and Fortune 500’s Top 10 US Contractor Lists for 2011 represent the major players in the nonresidential and nonbuilding construction sectors.

Bechtel and Fluor are not only the leading US construction firms; they are the trendsetters for the entire US nonresidential and nonbuilding construction industries. From a Jobenomics perspective, the future of all US construction corporations will largely depend on their success in the international arena with emphasis on emerging economies and economics within our own hemisphere (Canada and Mexico).

Bechtel Corporation (Bechtel Group) is the largest engineering company in the United States, ranking as the 5th largest privately owned company in the US[4]. In 2011, Bechtel had $32.9 billion in total revenue (up from $27.0B in 2007) and employed 53,000 workers on projects in nearly 50 countries. Bechtel doubled its New Work to $53 billion in 2011 from $21.3 billion in 2010 and $20.3 billion in 2009. Fluor Corporation is one of the world’s largest publically owned engineering, procurement, construction, maintenance and project management companies[5]. In 2011, Fluor had $23.4 billion in total revenue (up from $16.7B in 2007) in revenue and employed 43,000 workers on projects six continents. Fluor’s international business sectors (in order of consolidated backlog by region) are: 24% Australia, 22% United States, 16% Canada, 15% Latin America, 13% Middle East, 6% Europe, 2% Asia Pacific and 2% Africa. According to Fluor, Fluor’s future growth is dependent on international business as opposed to domestic US.

The following chart (extracted from ENR’s Top 225 Global Contractors list for 2011[6])) shows the top 10 global contractors (Bechtel #10) as well as the top 10 US global contractors (Bechtel #1)

Within the global top 10, Chinese companies had 5 positions and Europeans had 4 positions. Bechtel, the lone US company, occupied the 10th position. The top 10 US contractors earned a combined total $74.767 billion in 2011. The top single Chinese contractor (China Railway Construction Corporation) earned slightly more ($76.206 billion) than the total of the top 10 US contractors. Bechtel and Fluor earned almost as much as the next 8th largest US companies ($36.9B versus $37.9B). From a Jobenomics point-of-view, the international market holds immense potential for US construction industry, including US domestic homebuilders. What is needed is a common vision and collective game plan.

[1] Bureau of Labor Statistics, Industries at a Glance, Construction: NAICS 23, http://www.bls.gov/iag/tgs/iag23.htm, 21 Mar 12

[2] NAICS Association, Six-Digit NAICS Codes & Titles, http://www.naics.com/free-code-search/sixdigitnaics.html?code=23, 21 Mar 12

[3] MSNBC, Economy Watch, http://economywatch.msnbc.msn.com/_news/2012/04/24/11369617-home-prices-up-for-first-time-in-10-months?chromedomain=bottomline&lite, 20 Apr 12

[4] Forbes, Largest Private Companies in 2011, http://www.forbes.com/lists/2011/21/private-companies-11_Bechtel_800U.html

[5] Fluor, Investor Relations, 2011 Annual Report, http://investor.fluor.com/phoenix.zhtml?c=124955&p=irol-irhome

[6] ENR, Top 225 Global Contractors: 2011, http://enr.construction.com/toplists/GlobalContractors/001-100.asp

Self Employment Screen

Welcome to the Jobenomics “Self-Employment Screen“.

“20 Million Jobs by 2020”.

What is the Self-Employment Screen (SES)? The SES analyzes the key inherent characteristics and attitudes that influence entrepreneurial success and can help predict which of the four major entrepreneurial business environments a person is most naturally suited to: agent/representative, consulting/contract, franchises or small business.

The SES does not pre-judge whether someone should be self-employed. Rather, it provides the person interested in becoming self-employed with insights into her/his business development style, motivational factors, developmental needs and the type of self-employment that she/he would be most naturally suited to.

A copy of the SES report is provided online immediately upon completion of the survey.

For your complimentary assessment to determine the best type of opportunity fit for you, click here: Take the Self-EmploymentScreen™

Veterans

If you are a Veteran, we invite you to complete the CareerManagementPro™.

This profile will provide you with key insights into yourself and your personal strengths as you make important career decisions.

To begin this assessment, please click here: CareerManagementPro™ for Veterans

More Information

For more details and to purchase available profiles, please click here.

To hire small business coaches, contact: Hugh Ballou or Micro Biz Coach

Jobenomics

A National Grassroots Small Business and Job Creation Movement

Tag: employment

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Self Employment Screen