Class of 2013 to face tough start in job market

9:30 AM class, market, start, tough No Comments

High school and college graduates are still being hobbled by years of weak economic growth and an extremely tight job market, and that difficult start in the job market could impact the class of 2013 for years to come, a new analysis finds.

“Graduating in a bad economy has long-lasting economic consequences,” said Heidi Shierholz, economist with the Economic Policy Institute, which prepared the report on young workers released Wednesday.

The liberal-leaning think tank looked at high school graduates between ages 17 and 20 who aren’t enrolled in further schooling, as well as college graduates between ages 21 and 24 who have a bachelor’s degree and aren’t seeking further education.

The analysis found that the unemployment rate for the high school grads who aren’t going to college has improved somewhat since hitting a high of 32.7 percent in 2010, but not enough to give young workers (and their parents) much comfort.

An average of 29.9 percent of high school grads between ages 17 and 20 who weren’t enrolled in further schooling were unemployed and actively looking for work between March 2012 and February of 2013, according to their analysis. That’s up from an average of 17.5 percent in 2007, when the job market was much stronger because the recession had not yet begun.

Getting a college degree still greatly improves people’s job prospects, but many young college graduates also continue to struggle to find a job after many years of high unemployment and dim job prospects.

The unemployment rate for young, recent college graduates who weren’t furthering their education stood at an average of 8.8 percent between March of 2012 and February of 2013, according to the EPI analysis. That’s down from an average of 10.4 percent in 2010, but still much higher than 5.7 percent in 2007.

The EPI report noted that more than half of young high school graduates were enrolled in a college or university, following a long-term trend toward more young Americans heading to college. Still, many are finding it difficult to finance the increasing cost of education, and the weak job market could make it hard for those young people to pay off their student loan debt.

That's especially true if they can’t land a well-paying job. The EPI analysis found that young high school grads were making an average of $9.48 an hour in 2012, while young college grads were earning an average of $16.60 an hour.

Both groups have seen wages fall in the past decade as the economy has weakened, according to EPI’s analysis. That could turn out to be a big problem for young workers because when you start out your career at a lower wage, it can take years and years to catch up.

According to EPI’s analysis, the class of 2013 could be earning less than they might have in a stronger economy for as long as 10 or 15 years.

Shierholz noted that the unemployment rate for young workers is always higher than average, and that’s especially true in times of economic distress. Now, she said, young workers are in a particularly tough place mainly because the overall job market has been so tough for so long.

“The unemployment rate of young workers is exactly what we would expect it to be just given the broader weakness in the labor market,” Shierholz said.

The overall unemployment rate fell to 7.6 percent in March, according to the Bureau of Labor Statistics. But economists weren’t cheered by the drop because it came as many Americans stopped looking for work and therefore were no longer counted in the tally. The unemployment rate only includes people who have actively looked for a job in the past four weeks.

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Jobs being added, but good ones still tough to find

5:00 PM added, being, still, tough No Comments

Adam Zyglis / Buffalo News, Politicalcartoons

The news Friday that the economy created just 96,000 new jobs in August is another blow to both the millions of unemployed Americans and the countless working Americans who would like to have a better job.

Here's another piece of troubling news: Even if the job market starts to pick up, it may still be hard for some people to find a really good job.

That’s not just because of the Great Recession and sluggish recovery, although the persistently high unemployment rate of the past five years hasn’t helped matters.

Economists say that over the past 30 years or more, the rise of international competition combined with other changes in the U.S. market have generally made it tougher for people to find good-paying jobs that offer great benefits. That’s especially true for people who lack a college degree or other specialized training.

“You’ve had a shift in the economy, obviously, and the composition of the economy,” said Paul Ashworth, chief North American economist for Capital Economics.

A new analysis by the Center for Economic and Policy Research found that 24 percent of U.S. workers held what they defined as a “bad job” in 2010. By their definition, a bad job paid less than $37,000 a year and lacked health and retirement benefits.

That’s up from 18 percent of people who held a similar bad job in 1979. The salary figures have been adjusted to account for inflation.

John Schmitt, a senior economist with the CEPR, a think tank that receives funding from labor unions and other groups, thinks a big problem is that workers don’t have a lot of leeway to ask their bosses for better wages or benefits. That’s been especially true over the past five years or so, as jobs have become more scarce.

“The key for me is the decline in bargaining power of workers,” he said.

He said that’s not strictly about the decline in unionized workers. Even among non-unionized workers, the fact that so many people are competing for the same job has meant that employers have little incentive to offer big wage hikes or generous benefits.

“Employers know that if this worker gives them any push back at all on wages and benefits, they’re going to hire the person who’s just as qualified who is standing behind them,” Schmitt said.

Even when the unemployment rate was lower, Schmitt said it was getting tougher for many workers to ask for better pay or benefits.

One big factor is competition from other countries, where companies have been able to find workers to do similar work for lower wages.

That’s been most noticeable in U.S. manufacturing, which has shed millions of jobs since the late 1970s and early 1980s. But plenty of white-collar technology and professional workers – including even lawyers – have started to see similar competition from workers in India, China and other countries.

The Bureau of Labor Statistics reported Friday that manufacturing shed about 11,000 jobs in August. Some of the biggest job gains were in professional and technical services, including computing, and health care.

The long-term outlook shows that this could continue to be a problem.

The Bureau of Labor Statistics' list of the top 10 jobs that are expected to see the most job growth between 2010 and 2020 starts off on a high note. The number of registered nurses, who take home a median salary of $64,690, is expected to increase by 711,900, or 26 percent.

But beyond that, the top 10 list of fast-growing occupations mainly includes jobs that pay much less. Those include retail salespeople, home health aides and personal care aides. All of those jobs pay around $20,000 a year.

Ashworth, the Capital Economics economist, notes that many of the jobs that have seen the briskest U.S. growth can’t be done elsewhere because they require a physical presence. But he notes that many of those jobs, in fields such as health care and food service, also aren’t highly skilled.

“We’re talking about people who help out in nursing homes,” he said. “Those jobs do tend to be poorly paid and, of course, the benefits coverage is much lower.”

If the economy does pick up and more jobs start being added, Ashworth expects that workers will have more power to ask for better wages and benefits. But it’s not clear how long that will take.

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Murdoch’s tough call: Split News Corp. to survive

3:00 PM Murdochs, split, survive, tough No Comments

Oli Scarff / Getty Images

Rupert Murdoch has reportedly been against splitting up his News Corp. media empire.

Rupert Murdoch’s driving ambition may have finally met its match.

On Tuesday, his News Corp. media empire confirmed reports that it is thinking of restructuring into two separate, distinct, publicly traded companies -- a move that would effectively bring to an end Murdoch’s decades-long drive to pull together the disparate strands of his empire into one coherent company.

Harder still for Murdoch would be the fact that a division of the media giant would almost certainly mean cordoning off the newspaper business that once was the core of his company, which he has grown from a single Australian newspaper he inherited in the 1950s.

“This is a sign of the times,” Barton Crockett, an analyst with Lazard Capital Management, told CNBC.

“A lot of us were surprised that they're actually taking this step, because Rupert’s ties to newspapers are so strong and so historical, I was doubtful they’d go there as long as he was calling the shots. But they are, and I think that’s showing he’s evolving with the times, and the company is,” he added.

The restructuring of News Corp. would, according to a report in The New York Times, likely cleave its more profitable entertainment unit -- driven by News Corp.’s movie studio and powerful television networks -- from the smaller, less profitable, publishing business that includes The Wall Street Journal, The Times of London, The New York Post and the HarperCollins book business.

Rob Enderle, an analyst with Enderle Group, said the main motivation for dividing News Corp. in two is likely the protection of the Fox movie studio and television networks that are now the most profitable parts of the media empire.

Murdoch is likely to want to insulate this part of the business from the fallout from the phone hacking scandal that has led to the closure of the News of the World tabloid in the U.K., halted Murdoch’s BSkyB takeover bid and prompted the arrest of several key figures, he said.

“There has been a lot of concern about how broad the company’s holdings have become, and that if something were to happen to any one part of it, it could bring down the whole of it,” said Enderle.

The split is also likely driven by shareholder unrest over the direction of the company.

Less concerned about journalistic ethics and more worried about the company’s bottom line, News Corp. shareholders have become more vocal since the hacking scandal broke, and they are more likely to want the company to focus on its more productive entertainment assets, which generated $23.48 billion in revenue in the year ended June 2011, nearly three times the $8.83 billion in revenue generated by the publishing business.

There were also concerns that the size of the company could raise antitrust concerns if it wanted to engage in corporate acquisitions, Enderle added. A split would realign the company and enable it to focus it on each core operation, he said.

“This split is clearly along functional lines,” Enderle said. “The resulting companies should be easier to manage and focus, because it really did look as if News Corp. was losing track of each unit’s focus.”

News of the potential plan to split the media empire in two has certainly won the approval of the market, with shares of News Corp. rising more than 8 percent in trading Tuesday.

Media conglomerate Viacom took a similar path in 2005 when it split into two companies, leaving the television company CBS as a standalone company. Both companies have thrived since the move.

Murdoch has reportedly been against splitting up News Corp., but may have been swayed by the views of his second in command, Chase Carey, who is said to regard the publishing industry as mature and unlikely to yield substantial profits. Earlier this year, Carey made it clear that the company’s management team has considered a split.

“For Murdoch it has been all about empire building, about maximizing power and control, but the only thing that leaves you with is something unmanageable,” Enderle said, adding that it’s rare to see someone like Murdoch, who is clearly oriented toward status and power, step in and break up a company.

“The board is subordinate to Murdoch, so it probably really took a real and present threat to the overall entity for him to step back and realize there’s a need to restructure,” he added.

The outlook for Murdoch’s beloved newspaper business remains gloomy, Enderle added.

“By providing more focus for the unit they might be able to turn it into something more profitable, or find a buyer that will do something else with it, but the trend right now is away from publishing,” he said.

Crockett noted that the phone hacking scandal presented an opportunity for News Corp. to rethink its operations and improve the situation for shareholders. A division of the business will lead to a stronger company, he said.

“We’ve gone from lemons to lemonade,” said Crockett. “I think it’s something that will make News Corp. a stronger business and a better stock.”

How would investors be impacted if News Corp. split?

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