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Labor Force Participation Rate Plunges To 5 Year Low Of 64.6%

Tyler Durden's picture


The chart below demonstrates the plunge in the civilian labor force participation: in December 153.059 million were in the labor force, 15.267 million were unemployed and 83.865 million were not in the labor force: a 64.6% participation rate.

Now keep in mind the 5 year average participation rate has been 65.9% (including December's data, 66% excluding). That is a 3.073 million delta, and the definition of labor force attachment is probably a loose combination of government semantics. Had those 3 million still be in the labor force (and, of course, not employed), the number of unemployed workers would have been 18.340 million, which in turn would result in an unemployment rate of 12%.


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Fri, 01/08/2010 - 09:56 | 186686 Stuart
Stuart's picture

Good points AND that is just the U-3 figure.   The U-6, a much better reflection of employment stress in the labor market would be closer to 19 or 20%.

Fri, 01/08/2010 - 10:01 | 186688 litoralkey
litoralkey's picture

Everybody needs to drink up!

The 'Unexpected Drinking Game' has begun!!


Paulson    [BusinessWeek] U.S. Stock-Index Futures Drop on Unexpected Decrease in Jobs -


We didn't forget you our northern brethren! Break out the Screech!


(08:39:29 AM) Paulson: [Bloomberg] Canada Unexpectedly Lost 2600 Jobs in December, Paced by Transportation - -

Fri, 01/08/2010 - 10:06 | 186704 Anonymous
Anonymous's picture

For anyone with any analytical skills, the (UN)employment report confirms the HORRENDOUS situation... Of course, the MSM is already focusing on the "good news": the economy (supposedly) created jobs in November...

Fri, 01/08/2010 - 11:13 | 186816 Humble Gentleman
Humble Gentleman's picture

Jobs were probably created in November -- to support the Christmas holiday. The Christmas holiday is now over; watch out below. I spoke to a textile owner right after Christmas, and he said that he was going to let go four people after the new year. He also told me that his material costs continue to rise while his revenues have been dropping. Stag-what?

Fri, 01/08/2010 - 12:03 | 186888 msorense
msorense's picture

Exactly right.  I'm in manufacturing and have to buy various metals - brass, stainless, etc.  Prices are going up like crazy again.  No one can raise their price so guess what happens?  All the money printing will be good for government jobs but the private sector (those that don't serve the gov.) will have to cut, cut, cut.  Why? Because the Chinese price NEVER changes.

Fri, 01/08/2010 - 14:40 | 187203 Anonymous
Anonymous's picture

Those November jobs will only last one month. Next month the BLS will revise their birth/death model and suddenly a whole bunch of jobs will vanish.

Fri, 01/08/2010 - 10:15 | 186723 deadhead
deadhead's picture

And fly on the wall just reports that UPS is eliminating 1800 jobs...but the good news is that they raised their eps forecast.

Fri, 01/08/2010 - 10:56 | 186787 Cognitive Dissonance
Cognitive Dissonance's picture

A perfect example of the psychopathic nature of corporations and the distorted effect they have on their "investors" is this news release, along with thousands of others over the past 3 years.

We are laying off people, potentially destroying or severely disrupting 1800 families for years on end. Good news, that means the soulless corporation while make a few more pennies per share for the next few quarters.

What's good for the soulless corporation is bad for society. But because there interests are legally and morally disconnected from society as a whole and we've all bought into the idea that this is the way (and the only way) the world works, lets all act like soulless corporations. After all, it's a dog eat dog world. Or at least that's the justification for legally establishing self centered narcissistic naval gazing soulless corporations.

Circular logic that benefits the few at the expense of many.

Fri, 01/08/2010 - 11:19 | 186819 Ned Zeppelin
Ned Zeppelin's picture

When CD talks, I bow to his/her/its wisdom.

Who is a person? Since when is the root idea of our society, our common wealth, our great Republican experiment, that of grotesquely benefiting a few inanimate constructs and the human beings who control them? American Revolution version 2.0 in stores now!


Fri, 01/08/2010 - 13:17 | 187008 chunkylover42
chunkylover42's picture

Let me play devil's advocate.  By logical extension of this statement:

"What's good for the soulless corporation is bad for society."

then corporations should not be allowed to exist.  But we must provide for our livelihood in some fashion, so does the government provide a job for us?  Or should we just accept that corporations are inherently bad for society as a necessary evil (i.e. the benefits they provide outweigh the negatives).

Are we allowed to be small business owners selling our wares in storefronts?  But then at what point does a small business owner become a corporation?

I'm interested to hear how you would address the problem that what's good for the soulless corporation is bad for society.

(To be clear, I am not criticizing your overall premise that the lives of 1800 familes are negatively impacted for a few extra pennies per share.  I am just asking what you think we should do about it.)

Fri, 01/08/2010 - 14:07 | 187116 Cognitive Dissonance
Cognitive Dissonance's picture

Thanks for the feedback. To answer would entail a long post with lots of back and forth and my answer will not do justice to your question in the least. This is a simplistic response.

Let me first challenge a basic premise you put forth. "But we must provide for our livelihood in some fashion, so does the government provide a job for us?" So our livelihood can only come from large corporations? This is the only way we can be employed or make a living? Corporations don't need to be structured in the way they are. Why do we assume they can only be this way? For whose benefit are they structured? I'm told it's for the benefit of the public, that this is the only reason for their existence. Really?

To be fair, what I'm mostly talking about here are extremely large limited liability corporations. I also place some blame on certain states that the majority of large LLC's are domiciled in that have, through state laws, (shall we say) encouraged immoral behavior.

One of the constant explanations I hear for (limited liability) corporations is to limit liability by shielding the owners from financial harm coming from the actions of the corporation to no more than the owners investment. I'm told this makes it easier to raise capital and it spreads the wealth of ownership to smaller investors. That may or may not be the case. Personally I don't understand why this needs to be.

I've studied this subject (I'm also a CFP, CFA, CLU, RIA etc etc so I'm not speaking just from book knowledge) and when you boil it all down, what's really going on here is the LLC (along with enacted laws to enable certain behaviour) is better able to leverage it's money, work force and political influence with much less concern about the ultimate consequences than smaller companies and most certainly individuals. That my friend is an life advantage I can never overcome, never mind match. 

The worst that can happen is the LLC goes bankrupt and the owners lose their money. Don't conflate ownership of the LLC with the executives running the corporation. Owners can be executives but most owners are not executives. I didn't see any non executive (non principal) owners of Worldcom going to jail. Even the board of directors is shielded to some extent.

While on the surface the corporation(s) and politicians will assure us that it's to our benefit for big business to have these liberties, I'm not convinced in the least. I see it as a legal way to rape and pillage, to exploit their inherent advantages, with little concern over the consequences.

Something always comes to mind when I'm thinking about big (LLC) corporations. What is their purpose if I constantly hear that any new hiring will come from small business? While the question can be answered in so many ways, I fail to see one answer that shows me it's in the public best interest for that LLC to be in existence.

All I see is large LLC existing solely to leverage profits and minimize liabilities.

Fri, 01/08/2010 - 15:44 | 187351 chunkylover42
chunkylover42's picture

thanks for your post, I have a better sense where you're coming from now.  First, let me add some color to one of my statements, as I think you might have misinterpreted it a bit.

While I did say "But we must provide for our livelihood in some fashion, so does the government provide a job for us?" I was too casual in my example.  I did not mean to imply that individuals can only work at large corporations, just that we must provide for our own well-being in some fashion, which means we are working in some capacity.  It might be for a large corporation, but you could be the hot dog vendor on the corner too.  Somehow, you're putting food on your family's table.  My point was to illustrate that if you are not going to allow corporations to exist because they harm society, then by extension I'm not allowed to sell hot dogs on the corner either, because that's really just a small corporation.  If you decide that we can have small businesses but not large corporations, well, when does one become the other and who decides?  I can't reconcile an answer to that question.

Now let me challenge a premise that you have put forth: "For whose benefit are they structured? I'm told it's for the benefit of the public, that this is the only reason for their existence."  Corporations are structured for the benefit of their owners, not the public.  It is the owners that have risked capital to develop the corporation and they are entitled to the payoffs  (granted this assumes a more normal world that isn't built on moral hazards, but bear with me here). 

Now, I do agree with you regarding the behavior of exectuives within a corporation (or more specifically, an LLC).  In my opinion the penalties are not nearly stiff enough if crimes are committed.  However, the genesis of this conversation did not come from any crime.  Some people were laid off.  As tragic as that is for those families, I do not believe that anyone is entitled to a job.  The obligation for the people running the company is to do so on the owner's behalf, not make sure they hire/retain as many people as possible.  I am 99% certain that if my company could hire a replacement that would do as good a job as I do for $1 less, they would do it.  I'm a swell guy and everybody likes me, but I don't expect them to change their behavior just for me.  Here's the kicker: If I could get the same job and same situation with coworkers, etc. for $1 more, I would take it.  This company has no loyalty to me, and I have no loyalty to them.  It's not personal, it's just business.  For both of us.

I am also in agreement with you that corporations use their power to buy influence for their benefit, and that is disgusting behavior.  But if some corporation used all of it's power to save starving puppies, is that somehow OK because we all agree with the outcome?  Well then who decides what outcomes are ok?  What if the outcome has to do with abortion?  (I'm not trying to start a shitstorm with that one, I just picked an issue on which reasonable people can disagree).  Even though you and I don't like, at some level it becomes an issue of free speech.

As to why it is in the public's interest for LLCs to exist, I think you actually answered your own question.  You point out that small businesses do most of the hiring, and this is correct.  However, corporations do not magically appear out of thin air, they start as somebody's idea for a business, and that business starts out small.  They hire a few people, and then a few more, exactly in the way you described.  I would argue (my sense is you would agree) that overall this is a plus for society.  Putting people to work, allowing them to build something for themselves.  This goes back to my earlier question: at what point does this enterprise become harmful to society?  How do we measure that harmfulness and who decides?  IMO, nobody can decide those things, and as corporations grow, they can take on more owners in the form of small investors.  That could be you, me, or the hot dog vendor; it's up to each of us to decide.  If the business is well-run, they will all benefit from it.  That is good for society, no?

Fri, 01/08/2010 - 17:13 | 187540 Cognitive Dissonance
Cognitive Dissonance's picture

Thank you for your thoughtful reply. I think we are closer in our views than we might think based upon our posts. But in truth it matters not whether we are close or not. I don't think there is a right or wrong answer, just views and opinions. The point of my posts are to encourage discourse and alternative perceptions. I love it when I find that I'm incorrect because it means I have more to learn. Learning something new and different is never a reason to be upset or sad.

I was also very casual in my answers for the reasons stated. That of course allows room for interpretation. MsCreant calls me a windbag and at times I agree with her. But when you begin discussing a complex subject like this, no amount of wind is sufficient to fill the sails if you wish to properly convey your view.

I must say that there is a stark difference between what the public is told, what the experts are told and the truth, which is usually somewhere in between. But not always. I say this because as an "expert" I agree with your understanding of the purpose for corporations. If I were an uninformed citizen, I would have been led to believe something a bit differently.

I come to that conclusion from re-reading commonly available textbooks children are given as well as my discussions with my clients. My client base is well educated and yet I'm consistently surprised how uninformed they are as to how the corporate world works and the reason for corporations. While there are many reasons for this, the schools and the MSM are the main sources of peoples understanding and for the shocking lack of knowledge. I must constantly remind myself that the average ZH reader is far advanced compared to the average Joe.

My central thesis is that our society is structured for reasons that are not to the benefit of all but rather a few. And while there are plenty of arguments for and against how our society is structured, the entities that have an out-sized influence on how it changes and it's evolution are large LLC corporations and that this was/is done for specific reasons. I don't stand a chance in that competition.

In addition, there were/are certain points in the LLC evolution where I believe tragic and intentional errors (some would say political decisions) were made. I point to the here and now as one of those points. Looking back, another point would be when corporations were determined to have certain "human" rights that suddenly made them more than equal among equals. Tax law also favors LLC corporations in ways that the average Joe has no way of competing. There are other major issues that I won't go into.

I wasn't implying that corporations should save puppies but I understand what you're saying. Again, I am attacking the basic presumption that the world needs to have corporations as they are structured today in order to provide the basic needs of it's population. Large LLC corporations exist solely to make a profit for their owners and they are structured in a manner that I claim is psychopathic in nature, at least in today's environment. And that breeds people with the same dysfunction.

When faced with a choice between making a profit today or contributing to a better life for all, corporations will of course serve it's owners. IMHO this very structure ensures that things will get worse, not better in this world, and my premise is that this doesn't need to be, nor should it be, this way. The tragic insanity is that the average person is also walking a self destructive path mostly because the corporate/governmental structure rewards that type of behavior. 

If you read my posts here on ZH, you will see a constant theme, that being that we all need to push beyond our present understanding of how and why the world works as it does. To push past the pain of cognitive dissonance in order to expand our consciousness. It is clear to me that "man" will not survive the next few hundred years unless there is a substantial leap in our consciousness and our psychology. I'm most likely wrong on the time frame but not on the outcome if we don't change. Rather than sit around and complain, I'm being proactive, starting in my local community, but also on line in many different forums. 

I don't pretend to have all, or even some, of the answers. I prefer to see myself as the irritant in the oyster, which compels the oyster to adapt and change. In the process, the oyster creates something beautiful while strengthening itself. If nothing else, I grow from the discussions, so it benefits me to be the irritant.

Fri, 01/08/2010 - 18:35 | 187692 chunkylover42
chunkylover42's picture

I, for one, appreciate that you're the irritant in the oyster.  I enjoy provoking people too and challenging their thoughts.  Admittedly, I need to do more of that to myself, but that's a topic for another day.

Couple points I want to make: I also think we are not that far off in views.  I definitely acknolwedge that there are corps that play dirty and get to bend (break) the rules simply because they paid somebody to look the other way.  No question that happens, and it's a problem.  There is also an element of structure to our society that benefit some at the expense of many.  Mostly they are called politicians, and the more I see from each administration, the more I am convinced this is the case.  And you're right - the little guy is coming to a gun fight with a spiral notebook in that fight.

But (you knew there was a but) I do not think that everything a corporation does is harmful to society.  Even Wal-Mart, everyone's favorite whipping boy, provides low-priced goods to millions of customers who otherwise can't afford them.  That's why people shop there.  Yeah, there's a lot of bad stuff going on because they put mom-and-pop out of business, but should 100,000 rural residents be forced to pay more for groceries for the benefit of a few owners of a grocery store?  That's the same logic as a societal structure that benefits a few at the expense of many.

Anyway, I've enjoyed reading your comments and appreciate the civil discourse.  You've said some thought-provoking things.


Fri, 01/08/2010 - 19:50 | 187772 Cognitive Dissonance
Cognitive Dissonance's picture

I couldn't stay away from a good conversation.

"I do not think that everything a corporation does is harmful to society."

Neither do I. But why should we be facing a choice such as this? I must take the bad because there is some good? That in my opinion is a false choice that allows the status quo to continue. That same corporation could continue to do the good things without the bad. I'm not saying the corporation can't exist, only that it can't exist as presently structured.

I should not have to suffer terrible wrongs because of some perceived rights. There are other ways to provide the rights without all the wrongs. If that is the way to measure something we are all terribly sick in our view of our own worth to ourselves and to each other.

I'm terrible exagerating here but I want to make a stark point. That's like saying since my father goes to work every day and brings home a pay check on Friday that his beating of my mother, siblings and myself should be considered as part of the deal, that something good is coming from this dysfunctional relationship. While I agree eating on a daily basis with a roof over my head is good, the deal still sucks and doesn't need to exist simply to eat and be sheltered.

"Even Wal-Mart, everyone's favorite whipping boy, provides low-priced goods to millions of customers who otherwise can't afford them."

I won't even take on this from our point of view because there is lower hanging fruit elsewhere. Assuming that the exchange is equal and beneficial for all involved here in America, why would you assume it is also well where the goods are produced over seas?

The common argument is that our purchase of (let's say) Chinese goods puts Chinese to work. OK, under what conditions? Are these workers any better working 10-16 hours a day for low wages and no benefits in some factory hundreds or thousands of miles from where they formerly lived better off than on the farm or working locally where they come from. I can't say they are not better off but neither can you say they are better off because we simply don't have enough information.

But if we are to assume that workers rights are not as developed in China as they are in the developed world, I think it would be reasonable to lean towards not better off. And what about China's horrible environmental problems. Entire cities are corroding away from air, water and other pollutions. I could go on but you get the point.

I was talking the other day to a person about environmental degradation and he claimed that around his state, things were better. More trees, less pollution, cleaner rivers. He then said that proved things were getting better.

I then asked him how healthy the Brazilian rain forests were lately or their rivers and so on. We have simply exported the continued environmental degradation. It hasn't stopped, it's just moved over seas. Out of sight, out of mind.

Fri, 01/08/2010 - 15:53 | 187363 faustian bargain
faustian bargain's picture

I think what needs to be repeated often is a clear explanation of the elements of the things called 'corporations' that are anathema to free markets.

i.e. It's almost intuitively obvious (to me) the dangers inherent in both social and corporate welfare redistribution programs, in regulatory capture, moral hazard, and all that. But less clear to me is the actual disconnect between who or what a corporation is, and the citizens' rights to, say, association, private property, pursuit of happiness, etc., and where exactly a corporation allows people to infringe the rights of others. I can sense that they do, but I just can't verbalize how, specifically.

Fri, 01/08/2010 - 13:21 | 187013 trav7777
trav7777's picture

No, no no...

the "corporation" doesn't make money.  The EXECUTIVES do.


Look at the CEO-to-average pay multiple, there is what has happened.  The true owners of corporations have ceded control of them to management.

The corporations are owned by the little people, all the pensions, 401ks, mooch funds.  They are the ones who MUST FORCE CHANGE.

The corporation is is people WITH souls at the top of the executive class foodchain who are doing this shit and paying the "profits" to themselves as bonuses.

Think about it...a manager can game the numbers and take home $20M in a bonus and the company collapses in 3 years and he's gone or he can be real and get a $3M bonus each year for a few years...what's he going to do?

There is NO penalty for fucking lying, cheating, stealing or anything if you are a member of the executive class.  I know some of these people, they live an essentially consequence-free life!  And the world is their oyster.  Their kids get hookups.  It's a big family of backscratching among people who believe they deserve it at your expense.

Fri, 01/08/2010 - 21:11 | 187844 WaterWings
WaterWings's picture

Repeal the 14th!

Fri, 01/08/2010 - 12:08 | 186899 msorense
msorense's picture

I assume that they also laid off around 50,000 temporary workers from the holidays which were added in Nov.  FedEx must be laying off an additional 10-15K.  Remember all the talk about how the hiring of temporary workers was the first step?  I hope we will hear about this in the Jan. report.

 Also UPS/FedEX (services I use every day) have raised their prices for 2010.  That's where the increase in EPS comes from - they are not paying workers more. 

Fri, 01/08/2010 - 10:15 | 186724 Cursive
Cursive's picture

By this time, John Williams should be a household name.  Unfortunately, more people are familiar with William Hueng, the warble-voiced American Idol wannabe from years past, than Mr. Williams and his Shadowstats.  Not even the financial press reports Mr. Williams with any regularity.

Fri, 01/08/2010 - 11:03 | 186803 Cognitive Dissonance
Cognitive Dissonance's picture


I'm convinced that the MSM trots out John and other "outliers" on a semiregular basis to discredit them in the eyes of the public. They're only brought out when they are the minority, the exception to the general consensus group think rule we're all taught from childhood is bad, something to be shunned. Don't go against the flow. Don't fight the Fed. You can't fight city hall etc.

I firmly believe that this method of control is also followed by governments and precisely why some "dissenters" are officially allowed to flourish. It gives the average person the false belief that there is a vigorous discussion taking place regarding all aspects of the debate when in fact the debate is narrowly focused and outliers are simply there to be laughed at because they are so far from the consensus.

Fri, 01/08/2010 - 12:03 | 186887 Mad Max
Mad Max's picture

Sadly this seems very plausible.

Fri, 01/08/2010 - 12:26 | 186927 Anonymous
Anonymous's picture

It's probably why the Ron Pauls and Alex Jones of this world are so easily accessible on YouTube. They did try to kill Martin Armstrong though...

Fri, 01/08/2010 - 18:59 | 187716 Cognitive Dissonance
Cognitive Dissonance's picture

In my view, that simply means that Armstrong was considered a real threat and Paul and Jones are not. At least not yet.

Fri, 01/08/2010 - 21:31 | 187867 WaterWings
WaterWings's picture

I wonder if Armstrong was easier to remove because of the lack of an extremely passionate fanbase?

If AJ or RP were treated like MA I'm sure there would be massive demonstrations. Those two are kind of untouchable in my view - kind of like Kevin Costner's character in JFK when Donald Sutherland explains that, now that he is in the nationwide spotlight, he has to run with it - his enemies know there is too much attention on him to cause him harm. No point in removing a threat that can be easily marginalized with other methods.

Fri, 01/08/2010 - 11:27 | 186827 Ripped Chunk
Ripped Chunk's picture

Why would the financial press report on or quote Williams? It would run counter to 98% of the crap they report.

Fri, 01/08/2010 - 10:17 | 186732 Anonymous
Anonymous's picture

Why is Erin Burnett always gently clutching something cylindrical on CNBC, either a few rolled up sheets of paper or a pen? This morning, she was gently manipulating the sheets with both hands. I wonder if that's her own idea or one of the producer's ideas.

Fri, 01/08/2010 - 12:12 | 186903 Anonymous
Anonymous's picture

Did you see the stunned silence of the entire team at CNBC after the horrific performance of Christine Romer???

Erin looked like she was going to hurl. Watching this dumbass trying to spin positive info was comical but so frightening at the same time...

We are in unchartered waters here folks, and NO ONE driving the boat has a CLUE!!!!!

Fri, 01/08/2010 - 10:19 | 186736 Anonymous
Anonymous's picture

John Williams is soon to be included in some security list so he'd better not travel.

Fri, 01/08/2010 - 10:21 | 186738 AN0NYM0US
AN0NYM0US's picture

Shareholder sues Goldman for excessive bonuses

Fri, 01/08/2010 - 12:00 | 186878 Bam_Man
Bam_Man's picture

Goldman's shareholders should sue themselves for stupidity/gullability.

Anyone who invests in a "business" where bonuses are several orders of magnitude higher than profits (and dividends are virtually non-existent) deserves what they eventually get. And we all know what that is.

Fri, 01/08/2010 - 13:24 | 187020 trav7777
trav7777's picture

This is the PROBLEM!

Shareholders are the OWNERS!

Has ANYONE here owned a business?  Did you let your MANAGERS take home all the profits of YOUR business??

The notion of entitlement to executive bonuses- FUCK THEM.  They are systematically taking every goddamned dollar.

BACK to the days of DIVIDENDS, god dammit.

Fri, 01/08/2010 - 10:22 | 186739 Sancho Ponzi
Sancho Ponzi's picture

Notice the number employed in the civilian labor force - that number dropped 589k in December. Another half million people threw up their arms and said: 'F@ck it'.

Fri, 01/08/2010 - 13:57 | 187108 Anonymous
Anonymous's picture

Perhaps they made enough money on the stock market to quit their jobs and try to make it as traders? :-)

Fri, 01/08/2010 - 10:23 | 186741 Anonymous
Anonymous's picture

Markets are efficient. By taking a look at the financial markets you KNOW everything is fine. Stop bitching.

Fri, 01/08/2010 - 10:29 | 186750 Anonymous
Anonymous's picture

I have a feeling the govt is also doing slight changes to the wording in their unemployment surveys to get more people to say they arent actively looking for work. The large gap from U3 to U6 should be decreasing some with all the slanted good news the MSM is putting out but it isnt for some reason.

Fri, 01/08/2010 - 10:31 | 186753 crosey
crosey's picture

I'd like to see what the H1B visa participation numbers are.  My buds in the IT staffing space say that a lot of H1B consultant providers have folded up their tents.  Even the SAP consultant space is extraordinarily slow.  Feb-March are usually the tell-tale ramp up months for them.  If no ramp up, no new projects being undertaken, and that portends more US employer caution.

With all of the legislative/fed/treasury tomfoolery, why would any US employer take the risk to hire anyone?

Fri, 01/08/2010 - 10:43 | 186763 Argonaught
Argonaught's picture

IT consulting is a mess.  Freelance individuals and small staffing firms are getting crushed as hourly rates continue to rapidly equalize (globally).  A hidden issue facing small consulting shops and individual contractors is the widening payment terms.  The lower rates and harder-to-find-projects can be survived.  Not being paid for 45-60 days in an environment with limited credit availability is death. 

I might have to start working out bartering deals with the local grocer!

Fri, 01/08/2010 - 11:20 | 186820 sethstorm
sethstorm's picture

IT consulting is a mess.  Freelance individuals and small staffing firms are getting crushed as hourly rates continue to rapidly equalize (globally).

Unfortunately, I'd have to say that those exits to the Third World need to be closed if we're going to recover. 


Fri, 01/08/2010 - 11:33 | 186837 Ripped Chunk
Ripped Chunk's picture

The utilazation of offshore IT is massive. It has been growing for 10+ years. How do we "close the exits"?

Fri, 01/08/2010 - 12:09 | 186901 bugs_
bugs_'s picture

Cut the fiber.

Fri, 01/08/2010 - 12:37 | 186941 Anonymous
Anonymous's picture

through old fashioned protectionism and boycotts
until tax and regulatory reform can be made to
change the incentives....

Sat, 01/09/2010 - 00:17 | 188044 sethstorm
sethstorm's picture

1: Remove 20 CFR 655(regulation concerning "temporary" skilled work) and 20 CFR 656(the certification process).

2: Repeal/Rewrite any supporting laws to remove any legality to said practice.  Specify it in clear and constitutionally valid terms.

3: Apply the Business Death Penalty to any law firm (and suspension of any law license for those specifically involved), consultancy(same), or otherwise that attempts said practice.  Offer whistleblowers an incentive to leak said information.  Make it so toxic to even touch that point of immigration law that no respectable firm will touch it.

If someone wishes to work here, they cannot be made into a citizen-penalizing class of person. No Entreprenurship visas, H1, L1, EB* or whatever until our citizens already have work.




Sat, 01/09/2010 - 06:52 | 188244 Anonymous
Anonymous's picture

Gee, when it was blue collar jobs being outsourced it was natural evolution. NAFTA was just great for the economy. Now that my IT is outsourced I should have a problem? I wonder if there are any intelligent people in India who could Executive? Could my stock broker or accountant live in China? How about tele-conferencing with my Feng Shui consultant? Bollywood anyone? Why is people making 6 figures looking for a job a problem when those making 5 were not? The Hispanics are leaving the country. Re train for an exciting job in the agricultural services industry!!

Fri, 01/08/2010 - 10:53 | 186782 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

They won't Might be hiring a P/T or 1099er at the end of the year, but we will see. No one is making any money except the global elite.



Fri, 01/08/2010 - 10:58 | 186795 Anonymous
Anonymous's picture

a true story from a friend on mine:
She's in IT and out of work for the past seven months. She is of Anglo-Irish descent and has an unmistakably Irish name. Anyway, she sends out resume after resume with no response for months on end.
One day she sees a job listing, and gets the bright idea to send out TWO resumes. On one she has her own name, and on the other she used "Rasha Patel". All the other information was exactly the same. Guess who the IT firm called looking for? When she told them that "Rasha doesn't live here anymore" they hung up. They never even ASKED about my friend the Irish girl.

Fri, 01/08/2010 - 11:47 | 186858 crosey
crosey's picture

No kidding.  Wow.  Do you know whether the IT firm was the end-user, of a staffing agency?

Fri, 01/08/2010 - 11:51 | 186863 crosey
crosey's picture

No kidding. Wow. Do you know whether the IT firm was the end-user, OR a staffing agency?

Sorry for the typo.

Fri, 01/08/2010 - 12:02 | 186886 Mad Max
Mad Max's picture

That sounds like an open and shut employment discrimination case to me.  Hopefully your friend will consult a lawyer.

Fri, 01/08/2010 - 12:23 | 186923 WaterWings
WaterWings's picture

If you can't achieve the American Dream the traditional way, sue for every penny. Although that is now becoming the tradition - lawyer gets 3/4 after all the dust settles.  That and crossing your fingers at the casinos.

Fri, 01/08/2010 - 12:55 | 186974 sethstorm
sethstorm's picture

Then just make the 1/4 a large enough sum that you can live comfortably for a few decades should you get blackballed by business.

Fri, 01/08/2010 - 13:26 | 187025 trav7777
trav7777's picture

I can corroborate this.

I too am in IT and was out of work for 7 months.

I will not work with firms who are staffed by indians.  Period.

Fri, 01/08/2010 - 11:18 | 186818 sethstorm
sethstorm's picture

With all of the legislative/fed/treasury tomfoolery, why would any US employer take the risk to hire anyone?

Businesses need to stop acting like they're divine entities in this regard.  If they want to be part of the recovery in the US, business shouldn't complain when people call them out for holding out.

My buds in the IT staffing space say that a lot of H1B consultant providers have folded up their tents. 

Good riddance.  May US citizens fill their place.

Fri, 01/08/2010 - 11:21 | 186821 Ned Zeppelin
Ned Zeppelin's picture


Fri, 01/08/2010 - 11:30 | 186834 sethstorm
sethstorm's picture

The H1-b folks needed to leave; hopefully they won't return for a long while.  50-100 years is fine.

As for the recovery, it is very bad form for business to hold out for politically favorable terms.  For that, I say that they should stop acting like they're God - the role's already filled.



Fri, 01/08/2010 - 12:03 | 186879 WaterWings
WaterWings's picture


When our heavily indebted grads have to compete with cream-of-the-crop PhDs from every corner of the world, in their only place of refuge, I say boo.

The problem isn't outsourcing our manufacturing as much as it is getting the people born here educated enough to install, update, and repair high-tech. We don't need humans to stamp license plates anymore.

And when our mid-weight talent has to face-off with the world for highly specialized jobs here we risk incredible discrouragement. Measurable discouragement. 

I'm not fully settled on this issue, and I always try to frame everything in the view of an true free-market, but have you seen job requirements for entry-level positions? I think companies should be required to hire a few local interns for every H1-b. Remaining competitive is important, but our country is turning into a 3rd-world country where the rich build their walled-in mansions right in the middle of poor neighborhoods. I saw it in Brasil everyday:

Forcing Americans to be "citizens of the world" will make us look like South America in no time at all. Prove to me that this isn't "by design" - we are being convinced the problems of the world are America's fault.

H1-b is the opposite of "buy local". 

Fri, 01/08/2010 - 13:09 | 186994 sethstorm
sethstorm's picture


The problem isn't outsourcing our manufacturing as much as it is getting the people born here educated enough to install, update, and repair high-tech. We don't need humans to stamp license plates anymore.

And when our mid-weight talent has to face-off with the world for highly specialized jobs here we risk incredible discrouragement. Measurable discouragement.


Especially so for those who have the experience and skills but no degree to speak of themselves.

H1-b is the opposite of "buy local".

H1-b and the regulations around it (20 CFR 655/20 CFR 656) are just a Faustian deal. 

You could also call the entire program "shorting local".

Fri, 01/08/2010 - 12:05 | 186892 Arco
Arco's picture

Your statement defines ignorance. This country would be much better off if we issued an unlimited number of H1-b visas.

Fri, 01/08/2010 - 12:37 | 186926 WaterWings
WaterWings's picture

Hooray for Mumbai USA in 2020! Although I agree if we had a truly free market. Imagine if we had top talent passing on their skills down the pyramid. Instead, it is deemed intellectual property; kept behind closed doors while the American public increasingly does most of their grocery shopping at 7-11. Those taquitos smell sooooo good.

Fri, 01/08/2010 - 13:10 | 187000 sethstorm
sethstorm's picture

No thank you, but we're not about to turn into Argentina, much less the BRICs.

Fri, 01/08/2010 - 11:28 | 186832 crosey
crosey's picture

Businesses need to stop acting like they're divine entities in this regard.  If they want to be part of the recovery in the US, business shouldn't complain when people call them out for holding out.

Business is about making a profit, not divinity.  Small business accounts for the lion's share of organic hiring, and will not add fixed or variable costs until they know what those costs are going to be, and as importantly, whether revenues and cash flow will more than cover it.

Good riddance.  May US citizens fill their place.

My experience is that most employers want professionals "that speak English as their primary language" with requisite IT skills.  Trouble is, there's plenty of English, but too few IT skills, and those that do have the skills, often exceed the hourly price point.  Vicious circle....I worked in this for years.

Fri, 01/08/2010 - 11:48 | 186859 sethstorm
sethstorm's picture

Business is about making a profit, not divinity.

The influence they have, and not the profit they make as a business is where I make my objection.  The part that looks like divinity is where they use their status as being a business owner or employer as an entity beyond objection or criticism.  The only way to express such disregard is that they think that they're the Almighty since they run or own a business.

Again, my objection is the influence, not the profit.  You can run a company into the ground with losses and still have influence (General Motors); you can also run a successful, profitable business(small or large) that doesn't work on the political favors model. 

My experience is that most employers want professionals "that speak English as their primary language" with requisite IT skills.  Trouble is, there's plenty of English, but too few IT skills, and those that do have the skills, often exceed the hourly price point.  Vicious circle....I worked in this for years.

The reason I make such objections is that the H1-b program manipulates the qualifications keyword to make no citizen eligible.  I'd think that those who survived the dotcom bust and the 2003 offshoring wave are the latter category you describe.  The problem is that there's no legal way to match Third World price levels. 

At some point this nation is going to have to make do with the people it has within it(and not circumvent it).  The consistent lack of honesty and transparency in outsourcing/offshoring needs to stop.


Sun, 01/10/2010 - 21:23 | 189450 Anonymous
Anonymous's picture

First of all, let's get real!!

Neither the H1B nor the L1 in flux is going away any time soon! Why? Because major US companies and Indian companies are in the pockets of our politicians and the lobbys are strong... very strong!!

Bottom line... you can B&C and whine till the cows come home, but that's not going to change a dang thing! They'll do what they've been doing for the last eight or none years... simply turn their back to ya! They'll turn a deaf ear.

Immigration lawyers probably have a fairly chunky lobby with influence, too. The only way to stop it, is for the President to turn off the switch via an executive order, and I have news for you... that is not going to happen!!

Fri, 01/08/2010 - 12:16 | 186907 WaterWings
WaterWings's picture

The SLUGS, public companies (the ones foisted upon the taxpaying public), forced equality programs, and those that game the system illegally, are sucking every single drop of blood out of truly independent and productive small businesses.

The only thing that can stop our descent into minimum-wage gulag is Atlas. 

Fri, 01/08/2010 - 10:41 | 186762 gookempucky
gookempucky's picture

Tyler thanks for the heads up --my numbers are looking at a lower participation rate--more in the 59% area and falling-participation and unemployment go hand in hand. This table should help and to myself the most important section of interest starts at page 240.

Fri, 01/08/2010 - 10:58 | 186791 nopat
nopat's picture

I've been staring at this number for weeks, didn't make the connection.  This is the point where I list a bunch of excuses.

Fri, 01/08/2010 - 11:01 | 186800 Anonymous
Anonymous's picture

589,000 people gave up looking for work from November to December. A huge number. What happens when the economy does actually start to get better and all the people that have "given up" start looking for a job again? Look for a large Uptick in the Civilian Labor Force and a corresponding increase in the unemployment number to signal the end of the recession.

Fri, 01/08/2010 - 11:37 | 186841 Anonymous
Anonymous's picture

WOAH!!! Hampton Pearson (?) is on MSNBC now, and just said that the real problem with the report was that 600K just left the workforce, and that once things pick up in employment, the unemployment may actually go up.

Fri, 01/08/2010 - 12:04 | 186890 Mad Max
Mad Max's picture

Just MSM spin.

Turn, turn, turn...

Fri, 01/08/2010 - 11:38 | 186844 Trifecta Man
Trifecta Man's picture

This may be a result of the problems with small businesses, who provided most of the new jobs in the past.

Fri, 01/08/2010 - 11:51 | 186864 Steak
Steak's picture

So lemme see if I got this right.  If GDP starts to go higher and prices firm up then there will be lots of pressure for free money policies to be pared back.  But since the ponzi is dependant on free money any withdrawal of stimulus will hurt the economy bigtime. 

And if the job market starts to firm up all these people who are out of the labor market will jump back in thus driving the unemployment rate much higher.  Good job prospects will make unemployment worse.

What a sick sad world we live in where things that are good for the common folk are bad for "the economy" and banksters.  Perpetual state of servitude awaits all who are not upper crust.

Fri, 01/08/2010 - 12:01 | 186883 nopat
nopat's picture

The larger point though is that as the economy begins to recover and those folks start to re-engage to the workforce, that's going to put a LOT of downward pressure on wages.  Will the tail wag the dog and inflation spiral out of control, or will the dog wag the tail and deflation/stagflation be the mantra for the next 5-10 years?

Fri, 01/08/2010 - 13:32 | 187036 trav7777
trav7777's picture


Does anyone think the brazilian or mexican elite give a fk about how many people live in favelas?  They don't care about the middle class either.  Screw everybody.  They are about collecting as much for themselves and their dynasties.

The interlocking executive class in the US has turned every corporation into their own personal ATM.

When are the owners of these corporations going to revolt?  How fucked do they need to get by these lying, stealing, cheating freaking thieves before they stand up and elect their OWN directors instead of the CEO's golf buddies and executives of corporations on which the CEO sits on their board???

Fri, 01/08/2010 - 11:54 | 186868 Gimp
Gimp's picture

If you are doing cutting edge IT consulting you can still make money. If you are doing anything opensource  you are competing with the Indians  as the cost to entry is very low, the work is either really good or shit depending on who ends up actually doing the work. The old sub to sub to sub game continues so you never realy know who  the guy actually doing the work is and he is probably making $2 an hour not the $35 you are paying. Of course this is just how corporate likes it and if they can get us all down to $2 per hour the sooner the better for the fat cats. Those yachts are expensive to maintain.

Fri, 01/08/2010 - 12:19 | 186913 WaterWings
WaterWings's picture

Trebek: "How to grind the American public into dust?" is correct. 1,000 points.

Fri, 01/08/2010 - 12:01 | 186881 Anonymous
Anonymous's picture

Expect a positive number next month as 'looking for a job' is the New Year's resolution for may of the long term unemployed.

So...U3 back to 10.2% or higher to go along with the MONSTER downward revisions of about 800K or so to last years data.

Anyone care to guess how may years it'll take to run down the 5 million or so who've either exited the labor force or waiting to get in once significant job creation does occur?

Those 5 million (well maybe 4 million if you subtract those who've given up for good) will keep U3 at or over 10% for a long, long time

Fri, 01/08/2010 - 12:08 | 186898 Anonymous
Anonymous's picture


Did anyone else see the Christine Romer interview on CNBC this morning----?!?!?!?! Talk about GROSSLY incompetent!

If this is the best thing the Obama administration can trot out to explain the many contradictions in policy, our nation is in DEEEEEEP, DEEEEEP, you know what.

I think I am going to projectile vomit----someone pass me a barf bag!!

Fri, 01/08/2010 - 12:40 | 186945 Anonymous
Anonymous's picture

Falling participation means falsely low "official" unemployment data.
Notice the correlation between Obama's presidency and falling labor participation.
Does nobody else find it interesting?

Fri, 01/08/2010 - 13:25 | 187024 Sancho Ponzi
Sancho Ponzi's picture

Extended unemployment will extend into perpetuity.

Fri, 01/08/2010 - 13:22 | 187016 Anonymous
Anonymous's picture

I suppose we will learn that a Paycheck and Benefits is a unnecessary luxury to a good life with family, friends and children. Work is too intrusive and destructive of one's life.

If I had to live my life in a cubicle (Aka Movie Office Space; thank you ZH'ers) I will be most bitter and unhappy.

There is another movie they can rent and watch. The Hudsucker Proxy.

I wonder if someone is trying to pull one of those while working in the shadows of said company who does not seem to need workers anymore.

Fri, 01/08/2010 - 13:58 | 187113 Anonymous
Anonymous's picture

The U6 pre-1994 way of computing it will be elevated for a very long time and is now about 22% unemployment.

Fri, 01/08/2010 - 14:37 | 187192 Anonymous
Anonymous's picture

Here was some data I compiled prior to this month. It agrees directly with this article. The unemployment rate (U3) with normal changes in the workforce is greater than 12%. Decreases in the workforce caps the unemployment rate to present to the MSM.

Rec. Mon. Pop ch. WF ch. Pay ch. RT ch.
1970 15 3490 2258 -1044 2.8
1975 20 4724 3753 -2171 4.4
1982 39 7360 4329 -2838 5
1992 27 4033 2658 -1604 2.6
2002 29 6904 3355 -2691 2.3
2009 24 3578 41 -7156 5.7

Rec. = recession
Mon. = months duration
Pop ch. = Population change (NSA)
WF ch. = Workforce change (SA)
Pay ch. = Max change in payrolls (SA)
RT ch. = max chanage in U3 unemploment rate

Think of Seaseme Street. Which of these kids is doing his own thing? WF ch. 2009.

Also, people should look at the initial claims NSA and compare them to previous years. Especially previous recessions and reported monthly job losses. The bottom line is that jobs continue to be lost at a rate of about 150k to 200k over the last 5-6 months.

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