November Jobs Report: Over 1/2 Million Jobs Cut

In what seems to be a recurring theme, the country shed a much higher number of jobs than analysts predicted.  

According to the Department of Labor, 533,000 jobs were eliminated in the month of November.   That’s the highest number of monthly layoffs in 34 years.  The bright side is that the workforce started out 50% larger than it was in the mid-80′s, which means the percentage of job losses is not as great.  

Still.

The employment rate – with the new numbers factored in – ticked up 0.2% to rest at 6.7% nationwide.  And According to NPR, that number may be the most misleading of all:

The 6.7 percent unemployment rate actually underestimates the number of people hurt by the declining jobs market, because it doesn’t include people who have given up searching for work or part-timers who would like to work full time, [Economics Professor Sung Won] Sohn said. The report says more than 400,000 people left the labor market this year because they believe no jobs are available, he said.

When those people are included, the effective unemployment rate is really 12.5 percent, Sohn said.

No sector is immune, which was evidenced by the fact that “professional and business services” sector led the job cuts with 101,000.  Manufactuing and hospitality cut above 80,000 and 70,000 jobs, respecively. Keep in mind these numbers don’t count the layoff announcements made in the past few days, including AT&T, DuPont and NBC Universal.

In December of 1974 – the middle of the oil embargo – the country lost over 600,000 jobs.

Robert Reich: Where’s the Focus on Human Capital?

Former Labor Secretary (and current Obama adviser) Robert Reich had a great commentary on the public radio show Marketplace this evening.  His premise: bailing out the financial industry is short sighted; the only way to improve America in the long-term is to invest in its human captial.  In other words, if you want the jobs, fund the schools.

From the commentary:

Education is largely funded by state and local governments whose revenues are plummeting. As consumers cut back, state sales and income taxes are shrinking; three quarters of the states are already facing budget crises. On average, state revenues account for half of public school budgets, and most of the funding of public colleges and universities. On top of this, home values are dropping, which means local property taxes are also taking a hit. Local property taxes account for 40 percent of local school budgets.

The result: Schools are being closed, teachers laid off, after-school programs cut, so-called “noncritical” subjects like history eliminated, and tuitions hiked at state colleges.

It’s absurd. We’re bailing out every major bank to get financial capital flowing again. But we’re squeezing the main sources of our nation’s human capital. Yet America’s future competitiveness and the standard of living of our people depend largely our peoples’ skills, and our capacities to communicate and solve problems and innovate – not on our ability to borrow money.

In the end, Reich wonders if the reason the crisis in human captial gets put on the back burner is because there’s no imposing, Ben Burnanke-like figure warning us of the dire consequences of inaction. 

So what are those consequences?  With education costs rising in the U.S., more students are dropping out of high school and less are finishing college.  Since most European countries have government-funded higher education, this means the next generation of skilled workers will probably be based overseas.  All this is ocurring at a time when the U.S.’s labor markets that aren’t tied to collegiate degrees are falling apart or going overseas anyway.  So, within a generation, the bulk of the U.S. workforce could either underprepared or skilled in the wrong fields.

But look on the bright side – maybe our kids can get it right the next time around, when they repeat all the mistakes we didn’t teach them in history class.

Law Firm Collapse Leads to WARN Suit, Possibly Against Other Firms

One of the many misconceptions “corrected” by the financial crisis is that law firms are recession-proof.  That notion was buried last month when Thelen, an interneational legal presence, voted to dissolve.

While this is tragic on many levels, the biggest is of course the thousands of employees who found themselves out of work as a result.  Good news, then, when reports started coming in that other firms, including Reed Smith, Winston & Strawn and Duane Morris started snatching up chunks of the former firm.  Nixon Peabody brought over partners in every practice group, tripling the size of its Silicone Valley office.  They plan on hiring staff and associates too.  That’s got to be a good thing.  Right?

Maybe not.

Some of the former Thelen attorneys have filed class-action suits alleging that Thelen violated the WARN Act when they closed offices without the proper 60-day notice.

The ABA Journal is reporting that the attorney who filed one of the suits is now saying the firms hiring these large collections of former Thelen offices may be liable as well.  His theory is this:

To the extent that the company is dissolved, the individual partners of Thelen may be responsible, and any law firm that’s taken on a large group of Thelen partners could potentially be considered a successor company, which is liable under labor laws to make good on Thelen’s obligations to its employees.

Interesting.  It may be worthwhile to think about the strategy of suing the hiring firms, though.  In an economy where over 1 million people have lost their jobs in the past year, it may be a tough sell to force the firms willing to hire to pay for Thelen’s sins.