Posts for May 20, 2010

JOB LOSSES BY SIZE OF ESTABLISHMENT

May 20, 2010 – Mark Knold, Chief Economist – Utah DWS


A January Newsweek magazine article underlining the current recession stated, “the small- and medium-size firms that generate the majority of new jobs at home have been hurt most by the financial crisis as their lines of credit have dried up.” No source was given to support this claim, yet can data be found in Utah that might support this view? The answer appears to be yes.

Establishments are categorized by their magnitude of employment. What constitutes a small or medium size business as cited in the Newsweek article is probably based upon the definition established by the U.S. Small Business Administration. That advocacy organization identifies small businesses as those who employ fewer than 500 workers.

Utah’s employers can also be quantified into employment-size categories. March 2009 data is profiled, both because a yearly Utah Department of Workforce Services publication highlights the March employment size by establishment, and also March 2009 is roughly six months into the worst of the employment contractions, a contraction that intensified after September 2008.

Therefore, a comparison of March 2009 data against March 2008 captures enough of the eventual employment decline to offer a representative profile of employment losses according to size of business.

Between March 2008 and March 2009, Utah’s employers shed over 57,000 jobs. The accompanying graph reveals that it truly is the small- to medium-size firms that have cast off the bulk of these jobs. Only 14 percent of all the state’s employers account for 75 percent of those 57,000 jobs lost. The largest job-loss impact is within establishments with an employment size of 20 to 499, with the largest single group being the 20-to-49 employee range.

The Newsweek article said the drying up of lines of credit has impacted these sizes of firms the most. Economists here at Workforce Services agree with that assessment. The Utah size-of-establishment profile was actually reviewed by the Department’s economists several weeks before the Newsweek article came out. When quizzed as to why the Utah employment loss profile looked like it did, the consensus answer included the credit restrictions, the same conclusion that the Newsweek article presents.

Very small businesses (fewer than 10 employees) may have their own way of financing operations that don’t extensively reach into the credit community for help. At the other end of the spectrum, the largest firms have the internal resources and wherewithal to run and finance their operations without outside credit. Establishments in between are often in a position to need credit lines to meet payrolls, to bridge the seasonal cycles often associated with product sales, or to expand product lines and grow to a larger size. For these and similar reasons, these size establishments are vulnerable to the nuances of the credit markets, which is why their employment levels were the most negatively impacted.

JOBLESS CLAIMS SURGE BY LARGEST AMOUNT IN 3 MONTHS

May 20, 2010 – Today in Manufacturing.net
Applications for unemployment benefits rose to 471,000 last week, up 25,000 from the previous week -- the biggest jump since a gain of 40,000 in February ... continue

LAWMAKERS AGREE ON UNEMPLOYMENT BENEFITS EXTENSION

May 20, 2010 – Today in Manufacturing.net

House and Senate leaders have agreed on legislation to extend unemployment benefits for the long-term unemployed through the end of the year ... continue

OBAMA TRIES BACKDOOR APPROACH TO UNIONIZATION

May 20, 2010 – Business Brief

Since the Employee Free Choice Act went on legislative life support – meaning there’s little chance that unions will find it easier to organize workers – the administration has hit the issue from a different angle. Here’s the latest example of that. More…

QUANTIFYING UTAH’S RECENT JOB LOSSES

May 20, 2010 - Mark Knold, Chief Economist, Utah Department of Workforce Services

The worst of the current economic downturn now appears to be behind Utah and the nation. August 2009 seems to have been the employment low point. Over the past year (from August 2008 to August 2009), Utah’s economy contracted by over 73,000 jobs.

With the possible exception of the Great Depression (of which we do not have official employment counts), Utah’s economy has never contracted by this many jobs. The national economic downturn has been both powerful and pervasive, severely hitting at capitalism’s heart and soul and its credit markets. Employers were quite aggressive in scaling back employment in response to the sharp downturn in economic demand. Utah was no exception.

The amount of job loss over the past year is greater than any amount of job creation Utah experienced in a year’s time. Utah’s best 12 months of job growth occurred between June 2005 and June 2006, when 62,500 jobs developed. But just like the 73,000 12-month job loss by August 2009, that represents an extreme. Average 12-month job growth since 1995 has been more along the lines of 23,000. If Utah were to return to this average, it would take over three years for the Utah economy to recoup the same number of jobs it had before this current downturn began. Considering that it may take a portion of 2010 just to stabilize further job losses, it will take longer than three years to recapture these jobs.

Utah’s last economic expansion began in July 2003, lasting for five years. It peaked in 2008 with total job creation of over 180,100. The current downturn has removed over 70,000 of those jobs, roughly 39 percent of the jobs gained in that expansion. When all is said and done, the last seven years in Utah will record job growth, but it will have been a ride of ups and downs along the way.

TAX EXTENDERS

May 20, 2010 - NAM

The attached summary of H.R. 4123 American Jobs and Closing Tax Loopholes Act was released by the Ways and Means Committee this morning. We're hearing that the bill will go to the Rules Committee as early as this afternoon and could be on the floor by tomorrow. We have concerns about the revenue raisers included in the bill as well as possible changes to the pension funding relief.
http://waysandmeans.house.gov/media/pdf/111/America_Jobs_Summary.pdf

UTAH TECH CONTINUES TO GROW, INCREASES COMPETITIVE STANDING

May 20, 2010 – UB Daily

Despite the toughest economy in memory, Utah’s technology companies and employee base are continuing to grow and continuing to advance in standing compared to the state’s closest neighbors according to data the Utah Technology Council (UTC) issued today. Data from the Bureau of Labor Statistics Quarterly Census of Employment & Wages compiled by the UTC show that the number of technology and life science establishments in Utah grew from 5,628 to 5,816 from 2007‐2008, an increase of 3.34 percent.
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WASATCH FRONT PRICES RAISE STEADILY FOR THE FIFTH STRAIGHT MONTH

May 20, 2010 – UB Daily

In April, on a non-seasonally adjusted basis, the Zions Bank Wasatch Front Consumer Price Index (CPI) rose 0.2 percent compared to the national increase of 0.2 percent, as reflected in the Zions Bank and U.
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CHINA FINDS CORRUPTION TIED TO ECONOMIC STIMULUS

May 20, 2010 – Today in Manufacturing.net
Beijing disclosed widespread corruption linked to its $586 billion stimulus, saying thousands of officials have been punished for taking bribes, embezzlement and other abuses ... continue