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College Degrees Become the New Minimum Requirement for Employment

“The college degree is becoming the new high school diploma: the new minimum requirement, albeit an expensive one, for getting even the lowest-level job.

Consider the 45-person law firm of Busch, Slipakoff & Schuh here in Atlanta, a place that has seen tremendous growth in the college-educated population. Like other employers across the country, the firm hires only people with a bachelor’s degree, even for jobs that do not require college-level skills.

This prerequisite applies to everyone, including the receptionist, paralegals, administrative assistants and file clerks. Even the office “runner” — the in-house courier who, for $10 an hour, ferries documents back and forth between the courthouse and the office — went to a four-year school….”

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Why More Than 8% Unemployment Could Lie Ahead

“Severe fiscal tightening in the U.S. will lead to no growth or a contraction in the first two quarters of 2013 and will push unemployment over the 8 percent level, according to Lombard Street Research.

The knock-on effect will mean pain for the business sector, with corporate profits falling after a hit to consumer spending power, the firm said.

“Our view that unemployment could rise above 8 percent and that profits will be squeezed reflects a forecast of nil to negative 2013 (first quarter) growth, and further stagnation in (the second quarter),” a Lombard Street report released on Friday said.

The view contrasts sharply with that of other analysts who are considerably more bullish on the U.S. economy.

Keith McCullough, CEO of Hedgeye Risk Management told CNBC last week that he thinks employment could actually improve below 7 percent by the fourth quarter, adding that from a housing and employment perspective U.S growth is “pretty solid”.

(Read MoreKudlow: Sequester Will Grow Private Economy)

Lombard Street does not agree.

At the start of the year, the payroll tax that funds Social Security was raised two percentage points to its 2010 level of 6.2 percent. This was the largest component of tax increases approved by Congress in the resolution to the “fiscal cliff”.

Retail sales rose 0.1 percent in January, data released by the Commerce Department showed on Wednesday. These two events together should set alarms bells ringing as tax increases suggest a slowdown in the pace of consumer spending, Lombard Street said….”

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The Recovery Blesses the Income of the 1% While the 99% Slide Backwards

“Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data.

The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent.

Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel considered second only to the Nobel, concluded that “the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s.” …”

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State of the Union: The Recovery for Everyday People


“Despite optimism-mongering in the media and in certain quarters of Washington and elsewhere, we’ve had indication after indication in the economic data that whatever lousy progress has been made in nudging up GDP, American workers have not benefitted from it.

But now we know from the horse’s mouth, so to speak: they’re mired in a tough new reality that is in many ways getting worse.

“Deeply pessimistic” is the term used in the sobering survey, “Diminished Lives and Futures: A Portrait of America in the Great-Recession Era.” A confirmation of bits and pieces of economic data that has been trickling in over the years on this topic.

Just yesterday, for example, the Bureau of Labor Statistics reported that wages adjusted for inflation had continued their morose decline: in 2012, by 0.4% after having already declined 0.5% in 2011.

It doesn’t seem much. With nominal wages rising, workers might temporarily be fooled into thinking that they’re moving ahead. But enough of those declines, and pretty soon you’re talking about some real money.

They compound the lingering impact of the financial crisis. “Five years of economic misery have profoundly diminished Americans’ confidence in the economy and their outlook for the next generation,” conclude the authors of the survey.

And yet, since 2007, Congress borrowed $8 trillion, nearly doubling the US gross national debt to $16.48 trillion, and the Fed printed another $2.1 trillion, all under the unholy pretext of wanting to stimulate the economy [read…. Corporations Are Begging: We Need More Inflation!].

The survey draws a dire picture of the employment situation: 23% of the respondents had been laid off during the past four years. Of them, 10% spent more than two years looking for a job before they found one, and 22% still haven’t found one. While the economy has created jobs over the last few years, it has done so at a rate that barely kept up with the growth of the labor force.

If that: in the 2013 survey, 58% of the respondents had a job, down from the 2010 survey, when 60% had a job. The lower income categories were hardest hit. Only 38% of those normally earning under $30,000 had jobs, while 71% of those over $60,000 had jobs.

Where has all the money gone that the government borrowed and spent, and that the Fed printed? To China, Brazil, Mexico, into commodities, wars, farmland, into every conceivable financial asset, creating bubbles here and there, including the most gigantic credit bubble ever. Some people around the world have become immensely rich. And others, who’d already been immensely rich but had gotten a haircut during the financial crisis, were bailed out. Good for them. But it just hasn’t created a lot of jobs in the US.

That’s the good news. The bad news: a stunning 54% of those who’d been laid off and were lucky enough to find a job, now make less money than before. Less money in nominal terms, not even adjusted for inflation. A third of them got whacked by a pay cut of 11% to 30%. Another third reported that their pay had been slashed by over 30%. Ouch!

This new reality—finally finding a job but at much lower pay, or hanging on to a job but with a cut in pay—has sucked optimism out of the system. “Not only does the public not see signs of economic recovery now, they don’t see it in the near future either,” finds the report. And 32% of the people expect it to get even worse. A worrisome deterioration from 2010, when only 27% expected it to get worse.

Full recovery anytime soon? Only 12% expect it in the “near future”; 25% expect it to take 6-10 years, and 29% think that the economy will “never” fully recover. Mainstream-media optimism hasn’t quite sunk in yet, apparently…..”

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Australia Employment Grows More Than Expected

“Australian employers added part-time jobs in January and fewer people hunted for work, helping keep the unemployment rate unchanged, as interest rates at a half- century low support hiring.

The number of people employed rose 10,400 from December, the statistics bureau said in Sydney today, as part-time positions advanced by 20,200. The gain compared with the median estimate for a 6,000 increase in a Bloomberg survey of 25 economists. The unemployment rateheld at 5.4 percent as about 30,000 new jobs in resource-rich Queensland state offset a similar decline in the manufacturing hub of Victoria….”

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Job Creation Falls in January

“Gallup’s Job Creation Index fell from 17 in December to 16 in January, the lowest level in 11 months. The index for nongovernment jobs fell from 20 in December to 18 in January, the lowest reading since February of last year. The index is based on telephone polling of employees who are asked whether their employers are hiring or firing workers.

The largest decline came in federal government employment, which posted an index reading of -10, down from -7 in December. The federal government is the only area that has not posted a positive index reading in the past year. State and local government job creation turned positive in August and has remained in positive territory ever since.

Since August, private sector job creation has slipped from 23 to 18, mirroring the slide in federal job creation. The two sectors combined have offset growth in state and local government hiring, which also declined slightly in January.

Gallup notes…”

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$HD to Hire 10k Seasonal Workers


“(Reuters) – Home Depot Inc said it will hire 10,000 additional seasonal workers for its key spring selling season as it sees higher sales growth during the period.

The home-improvement retailer said it will hire 80,000 seasonal workers this year, 14 percent more than it hired last year.

Home improvement chains such as Home Depot and Lowe’s Cos Inc and retailers selling home goods and furnishings see higher sales during the spring season as people start to rebuild their homes after the cold winter.

The uptick in the U.S. housing market is also benefiting home improvement chains.

Shares of Home Depot closed at $66.39 on the New York Stock Exchange on Tuesday.”

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Robots and the Burger Flipping Economy

It the economy was not already hard enough for many distinguished citizens to have to resort to menial jobs like flipping burgers, well now those jobs may be going by way of the robot.

A new robot has the ability to serve up 360 burgers per hour.

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New Normal: Capitalism is Ignoring the Writing on the Wall

“One of the challenges in life is to know the difference between a cyclical slump and a transformation that will permanently change a business, industry, economy, lifestyle, living standard, a family’s prospects or the future of a nation-state.

Harvard Professor Clay Christensen explained the difference, in the business world, with his 1997 breakout book “The Innovator’s Dilemma”. I interviewed him at Harvard in 2005 about his theory of disruptive innovation and how the failure to recognize the dangers, and opportunities, in changing circumstances have devastated many industries from steel to retail, telecoms, the media and others.

All these sectors failed to recognize the signs or patterns that revealed the fact that changes were permanent and required recalibration and reframing of the industry, business and mentalities of all involved.

Last week in Davos, Professor Christensen elaborate his theory to include macro-economics and markets. As with the invention of the PC or Internet or mini steel mill, the current economic conditions are transformative and require recalibration and reframing of strategies, policies and political judgment.

He calls it the “capitalist’s dilemma” and said that the relatively jobless economic recovery in the U.S. and elsewhere is the new normal, and presents serious political and social consequences. Some 204 million people remain unemployed worldwide, in large measure due to the 2008 meltdown, but there are other reasons, he pointed out.

“Whatever happens on Election Day,” wrote Christensen in the New York Times just before the voting, “Americans will keep asking the same question: When will this economy get better?”

Christensen is not an ideologue. He analyses facts, not opinions, and has figured out why low or no interest rates on capital has caused a timid recovery with mediocre job growth. The old paradigm was that give away cheap money and the enterprising, and enterprises, will innovate and create jobs and gobs of economic activity.

Perhaps the sluggishness is due to the fact that trillions in debts are being paid down after America’s spending binge. But that’s only a small part of the story, he said. Trillions remain on the sidelines earning low interest, or invested in stock markets with hedge funds.

“Even if there is robust growth there won’t be job creation,” he said.

This is because the challenge is not framed properly. Policymakers must differentiate – by providing tax or other incentives — between three categories of innovation in other to “unlock the type of innovation capital” that creates real wealth for an economy or industry or business….”

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Planned Layoffs Rise in January According to Challenger, Gray & Christmas

“NEW YORK (Reuters) – The number of planned layoffs at U.S. firms rose in the first month of the year, but that was more than offset by an increase in plans to hire, a report showed on Thursday.

Employers announced 40,430 job cuts this month, up 24.2 percent from 32,556 in December, according to the report from consultants Challenger, Gray & Christmas, Inc.

But January’s job cuts were down almost the same amount from the same time a year ago, declining 24.4 percent from 53,486 in January 2011. It was the third lowest number of January lay-offs recorded by Challenger going back to 1993.

“The relatively low job-cut totals we have seen for the last couple of months indicate that employers do not foresee a prolonged decline in economic activity,” John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

The financial and retail sectors lost the most workers. Financial firms cut 8,578 workers, while retail companies dropped 6,676 jobs….”

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German Unemployment Unexpectedly Declined in January

German unemployment unexpectedly declined in January, adding to signs that a pick-up inEurope’s largest economy is gathering pace.

The number of people out of work fell a seasonally adjusted 16,000 to 2.92 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted an increase of 8,000, the median of 31 estimates in a Bloomberg News survey shows. Joblessness declined by 2,000 in December instead of a previously reported gain. The adjusted jobless rate dropped to 6.8 percent this month, matching a two-decade low….”

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James Altucher: America Has Hit “Peak Jobs”

” “The middle class is being hollowed out,” says James Altucher. “Economists are shifting their attention toward a […] crisis in the United States: the significant increase in income inequality,” reports the New York Times.

Think all those job losses over the last five years were just caused by the recession? No: “Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market,” according to an AP report on how technology is killing middle-class jobs.

When I was growing up in Canada, I was taught that income distribution should and did look like a bell curve, with the middle class being the bulge in the middle. Oh, how naïve my teachers were. This is how income distribution looks in America today:

Income distribution in America, 2011

That big bulge up above? It’s moving up and to the left. America is well on the way towards having a small, highly skilled and/or highly fortunate elite, with lucrative jobs; a vast underclass with casual, occasional, minimum-wage service work, if they’re lucky; and very little in between….”

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Neil Kashkari To Leave PIMCO and Run For Office in CA

Neel Kashkari, one of the main operatives of the bank rescue TARP (and therefore one of the men who helped save America from financial Armageddon) is leaving PIMCO, and running for office, according to Dealbook.


It’s not clear what office he’ll run for, except that it will be in California, and it will be as a Republican.

Frankly, if someone at the heart of TARP can entertain a run for office without being totally laughed out of the room, that tells you a lot about how America has gotten over the crisis.

Of course, any run will inevitably bring out a replay of some of his most infamous moments, including when he was asked by a Congressman during a hearing: “Is Kashkari a chump?….”

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Jobless Claims Fall to 1 1/2 Year Lows in the U.K.

“U.K. jobless claims unexpectedly fell in December and a quarterly measure of unemployment also dropped, underlining the resilience of the labor market in the face of a weak economic recovery.

Unemployment claims declined by 12,100 from November to 1.56 million, the lowest since June 2011, the Office for National Statistics said today in London. In the quarter through November,unemployment measured by International Labour Organisation methods fell to 7.7 percent, the lowest since the three months through April 2011. The report also showed that wage growth slowed.

The jobs market remains the bright spot in the economy, which may have shrank in the fourth quarter and is facing the threat of a triple-dip recession. The Bank of England’s Monetary Policy Committee voted 8-1 to leave its bond-purchase programunchanged this month and said today recent developments “strengthened” the view among some officials that no more stimulus is needed.

“It continues to be surprising that employment is growing so strongly when the economy is flat-lining,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. “The weakness of pay growth helps. The economy may grow this year, albeit slowly.”

The median forecast of 28 economists in a Bloomberg News Survey was for jobless claims to increase by 500 in December. The unemployment rate on that basis remained at 4.8 percent.

Payrolls Growth…”

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