Photograph by David Turner/MCT via Getty Images

Guest workers harvest the strawberry crop at a farm in China Grove, North Carolina.

Now they can have their immigration bill and eat their deficit, too.

After warnings from some corners — such as the Heritage Foundation claiming the Senate’s immigration reform bill will cost trillions of dollars over five decades — the Congressional Budget Office has scored the measure:

A $175 billion savings over 10 years– with $197 billion in deficit reduction and some offsetting expenses.

About 8 million undocumented immigrants would gain legal status under the bipartisan Senate bill, the CBO report.

And pay taxes.

Sponsors see a springboard in that projection:

CBO report a huge momentum boost; debunks the idea that #CIR is anything other than a boon to our economy

— Chuck Schumer (@ChuckSchumer) June 18, 2013

Today’s report from #CBO is proof positive immigration reform is good for our economy and will help reduce the deficit.

— Lindsey Graham (@GrahamBlog) June 18, 2013

The Social Security Administration has said that the bill would generate more than $275 billion in revenue for Social Security and Medicare, increase the gross domestic product by 1.63 percent and add more than 3 million jobs over the next decade.

“Comprehensive Immigration Reform” is a budget builder.

It’s a jobs bill.

Somebody tell Jim DeMint.

Original post is Immigration Bill: $175 Bln Savings by Political Capital.

Photograph by Andrew Harrer/Bloomberg

Contractors smooth the concrete on a curb at Skanska USA Building Inc.’s Inova Health System construction site in Lorton, Virginia.

The figures used by the U.S. Labor Department to adjust changes in payrolls for seasonal variations have represented a higher hurdle so far this year than in the recent past, according to economist John Herrmann.

That’s about to change.

The government reported last week that companies added 178,000 workers to their headcounts last month, following a 157,000 gain in April. In order to allow comparison from one month to the next, the data are adjusted for seasonal swings. Otherwise, for example, employment would always surge in November and December as retailers prepare for holiday shoppers and then plunge in January and February when the additional staff is let go.

May typically shows a big gain in unadjusted employment as warmer temperatures promote home-building, tourism-related industries prepare for the summer-vacation season and new college graduates join the workforce. The surge last month was even stronger than usual.

Excluding government agencies, private payrolls last month expanded by 907,000 workers before adjusting for seasonal swings, the biggest advance for any May since 2007 and the third-biggest since 1998, according to Labor Department’s June 7 report.

After making the adjustments, the 178,000 increase in May was only the biggest for the month since 2011. Using the average adjustment from the past three years would have produced about a 247,000 increase in payrolls last month, said Herrmann.

And last month wasn’t the only one facing such a constraint. In four of the first five months of this year, the number used to adjust the data depressed payrolls more than it did on average over the previous three years, according to calculations by Herrmann, director of U.S. interest-rate strategy at Mitsubishi UFJ Securities in New York.

The good news is that, statistically speaking, what the Labor Department subtracts from one month, has to be made up later so as not to influence the total readings for 2013.

And that will begin with the June payroll figures and continue to September, according to Herrmann’s projections. The seasonal adjustment will add about 40,000 jobs to the job count compared to the 2010-2012 average for this month and the next three, Herrmann said.

“The seasonals matter a lot because they have a big say in shaping people’s views and assessments of the data,” Herrmann said in an interview. “The job market should continue to gain momentum for the rest of this year and into next year. We won’t have a repeat of last summer’s soon.”

Last year, private payroll gains averaged 126,000 a month from June through September after growing at a 214,000 clip in the first five months of the year, prompting concern the economy was swooning. More positive adjustments this year may pre-empt a similar slump.

Original post is Payrolls Get U.S. Labor Boost by Political Capital.

Photograph by Spencer Platt/Getty Images

Job seekers wait in line to meet with employers at the 25th Annual CUNY big Apple Job and Internship Fair at the Jacob Javits Convention Center on April 26, 2013 in New York City.

Unemployment rose to 7.6 percent in May — and economists say that, counter-intuitively, that’s a sign of a U.S. labor market on the mend.

About 420,000 people joined the workforce last month, the biggest gain in seven months, figures from the Labor Department’s survey of households showed today. Of those, 319,000 actually found a job, and the rest didn’t, causing the jobless rate to climb.

The so-called underemployment rate, which includes people who have left the labor force because they are discouraged by job prospects and those working part-time because they couldn’t find full-time work, actually slid to 13.8 percent from 13.9 percent in April.

Part of the reason is that fewer Americans were glum about finding work. The number of discouraged workers fell to 780,000 last month, the fewest since September 2009, according to Labor Department data that isn’t adjusted for seasonal variations. It was the fewest for any May since 2008.

“Discouraged workers are becoming more positive about the outlook for the labor market, so they’re starting to come back in and search for work,” said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh, said after the report. “We’re adding jobs at a steady clip, above the level that’s needed to absorb new entrants into the labor force. People are saying, look, the job market is getting better.”

Payrolls climbed by 175,000 workers in May, above the median forecast of economists surveyed by Bloomberg that projected a 163,000 increase. That compares with April’s revised 149,000 gain in employment.

Consumer confidence last week hovered near a five-year high, according to the Bloomberg Consumer Comfort Index, which showed Americans’ feelings about the state of the economy have improved to the best level since January 2008.

Still, stagnant wages could prove a damper to confidence going forward. Average hourly earnings for all employees on private non-farm payrolls, at $23.89, was up just one cent in May.

Original post is Unemployment Rate Increase: Growing Worker Confidence? by Political Capital.

Photograph by Mario Tama/Getty Images

Job seeker Percy Chang, right, fills out paperwork at a Long Island job fair on May 2, 2013 in Uniondale, New York.

The U.S. will need to add fewer jobs each month to reduce unemployment, a Chicago Federal Reserve study found. And the change is all about demographics.

Researchers at the Federal Reserve Bank of Chicago found that as aging baby boomers retire and population growth slows, payroll gains averaging 80,000 a month and eventually just 35,000 monthly will be enough to keep the U.S. jobless rate steady. Gains above that will help drive down unemployment.

“These estimates are lower than the conventional wisdom that 100,000 to 150,000 jobs per month are needed to lower the unemployment rate,” Daniel Aaronson, director of microeconomic research at the Chicago Fed, and Scott Brave, a senior economist, wrote in a report dated July 2013 on the central bank’s website.  “This has ramifications for the potential speed at which the economy can grow in the future.”

The new estimates mark a break with the past. Trend job growth was at about 150,000 jobs per month in the 1980s and early 1990s and increased to 200,000 jobs in the mid- to late- 1990s, bolstered by growing labor force participation and baby boomers in their peak working years.

Aaronson and Brave tracked four variables to arrive at their estimates: the labor force participation rate, population growth, the rate of unemployment that would be associated with a stable economy and the relationship between hiring as measured by the Labor Department’s household survey and changes in payrolls derived from its survey of employers.

One wild-card is immigration. Current estimates put total population growth at 1 percent, falling to 0.8 percent by 2018. If immigration rates recover to pre-recession levels, they could boost the population growth and, in turn, trend employment growth to about 100,000 jobs per month over the next two years and an average of 65,000 over the second half of the decade.

The researchers also provided estimates using the most optimistic and pessimistic scenarios. A smaller decline in labor force participation and a lower natural unemployment rate could also drive up trend employment and would mean it would take 120,000 jobs per month to steady unemployment over the second half of the decade, while the most pessimistic would mean no growth at all in payrolls will accomplish the same feat.

Original post is Unemployment Eases with Fewer Jobs by Political Capital.

Photograph by John Moore/Getty Images

Immigrants take the oath of U.S. citizenship at a naturalization ceremony held at the U.S. Citizenship and Immigration Services (USCIS), office on May 17, 2013 in New York City.

With Kathleen Hunter

As the Senate Judiciary Committee resumes its markup today of immigration legislation, Congress faces obstacles of its own making in its efforts to overhaul the system.

Florida Republican Marco Rubio, a member of the bipartisan Senate team that wrote S. 744, has said that he supports a biometric data proposal designed to toughen border security — a plan that Democrats call a poison pill.

The Judiciary Committee’s chairman, Vermont Democrat Patrick Leahy, may offer a measure that would give foreign nationals in same-sex marriages with U.S. citizens the same benefits as heterosexual couples, which Rubio and other Republicans have termed a deal-breaker.

While the Senate is advancing comprehensive legislation –which would offer a path to citizenship for the 11 million undocumented immigrants already in the U.S., toughen border security and provide for temporary workers — House leaders plan to offer a series of stand-alone bills. They include one on border security and others on temporary-worker programs that fall short of President Barack Obama’s call for a far-reaching plan.

There are lawmakers on both sides of the debate who probably don’t even want a deal, said Mario Lopez, president of the Hispanic Leadership Fund and former executive director of the House Congressional Hispanic Conference.

“Some Republicans just don’t want reform at all and are happier with the status quo,” said Lopez, a Republican. “There’s also a certain segment of the left that doesn’t want to solve the issue. They’d like to set it up so that what happened in 2007 happens again.”

Read the whole story here.

Original post is Partisan Obstacles Threaten Immigration Revisions by Political Capital.

Photograph by Tomohiro Ohsumi/Bloomberg

A bitcoin.

Need a job?

Try programming a gambling website that accepts the virtual currency Bitcoin, or creating computer blueprints of the objects that get printed on a 3-D printer.

While last week’s Labor Department report showed U.S. job creation has been moderate at best, hiring is on the rise for skills related to the technology world’s hottest inventions, Bloomberg News reported.

Job postings referencing Bitcoin surged 433 percent in January through March compared to a year earlier, while jobs based on 3-D printing rose 206 percent, according to Elance Inc., a service that connects employers with remote online freelancers.

Even projects that mention the Web-enabled spectacles from Google Inc. have surfaced, Mountain View, California-based Elance said. So far, Google Glass is in use by only a limited number of early adopters.

To be sure, these very nascent trends won’t even begin to make a dent on the pool of unemployed Americans. More than 11 million people — 7.5 percent of the workforce — were looking for work in April, Labor Department data showed last week.

In the meantime, the supply of online workers with the kind of background Silicon Valley companies have been clamoring for is growing, Elance data show. Those with an expertise in science, technology, engineering and math surged 153 percent from a year earlier. That compared with 52 percent growth of contractors on the company’s platform in the same period.

Original post is Help Wanted: Bitcoin, 3-D Printing, Google Glass by Political Capital.

Photograph by John Moore/Getty Images

Commuter passengers move through Penn Station on April 16, 2013 in New York City.

At the risk of raining on Wall Street’s parade today after the Labor Department’s April employment report, there are some caveats in the data.

Of the jobs added last month, many were in industries that typically don’t pay a lot. The average number of hours worked during a week decreased. More people said they were working part-time for economic reasons. And lastly, there was a
narrowing in the breadth of industries adding to headcount.

Granted, the labor market report showed resilience – 165,000 net new jobs were created in April, while revisions added 114,000 to payroll counts in the previous two months. Also, more people entered the labor force and were successful
finding work, allowing the jobless rate to fall to a fresh four-year low of 7.5 percent.

“The sources of strength weren’t the most high-quality jobs but they were jobs nonetheless,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said in a note to clients.

Restaurants and retailers accounted for 67,200, about 40 percent, of the bigger-than-projected gain in total job growth last month. Employment at food services businesses increased 1.1 percent in the last three months, the most since the end of 2011. The median wage for workers in food services was $9.10 an hour as of May 2012, the latest available data from the Bureau of Labor Statistics show. For all occupations it was $16.71.

Payrolls in the retail industry, from department stores such as Macy’s to home-improvement outlets like Home Depot and auto dealerships selling Ford F-150s, climbed 29,300 in April. The gain was the biggest in five months. The median hourly wage for retail sales workers was $9.56.

The report also showed that employees worked 34 hours, 24 minutes a week in April on average, down 12 minutes from the prior month and the fewest since January. The decrease may restrain incomes and underscores the softer tone of recent data that indicate a lull in the economy this quarter. What’s more, an additional 278,000 people said they were working part-time for economic reasons.

Finally, there’s the Labor Department’s so-called diffusion index of private employment, which measures the breadth of industries adding or reducing payrolls. The gauge of 266 private industries declined for a fourth month to 53.9, the lowest level since August. The index for the higher-paying manufacturing industry slumped to 44.4, showing more factories were reducing headcounts than taking on more workers.

Original post is April Jobs Report: Caveats by Political Capital.

Photograph by Patrick Fallon/Bloomberg

An employee demonstrates how to prepare a room for guests at a hotel in Los Angeles, California.

The more time government statisticians have to crunch the numbers, the stronger the job market looks — that is assuming you’re not looking to earn in the six figures.

On March 8, the Labor Department said employers added 236,000 workers to payrolls the month before. As of today, the gain for February is 332,000, almost 100,000 more than first estimated. Excluding the mid-2010 surge in hiring of temporary workers to conduct the Census, the February employment jump is now the biggest since November 2005.

Changes to the job count for March are heading in the same direction. The 88,000 increase for the month announced on April 5 — which raised concern that federal government budget reductions, or sequestration, were cutting the legs out from under the labor market and sent shivers through financial markets — today was revised to 138,000. These figures will be updated again with the May employment report released on June 7.

On net, revisions added a combined 114,000 to the March and February jobs tally today. Should they continue in the same direction, the 165,000 increase in payrolls for April reported this morning could easily top 200,000 when all is said and done.

“The upward revisions are probably the single-biggest piece of news,” said Gary Burtless, a labor economist at the Washington-based Brookings Institution. “In terms of payroll employment, the winter was very strong.”

The Labor Department surveys about 145,000 employers representing approximately 557,000 single worksites to calculate the payroll count. Not all respond on a timely basis, prompting revisions over subsequent months as more information becomes available.

Which industries were among those too busy interviewing potential candidates to respond to Labor’s queries then and there? Hotels and restaurants took the top spot, adding an 60,000 additional workers than the government estimated for February and March initially.

Others were less busy firing than previously thought. Retailers cut 4,000 employees from behind their counters in March instead of the 24,000 first estimated.

There is some downside to the positive readings, though. Julia Coronado, chief economist for North America at BNP Paribas in New York, said the revisions are concentrated in areas that benefit from tourism and exports.

“The good news is that we are growing off of global strength as U.S. households deleverage their balance sheets,” Coronado wrote in a research note. The bad news, she said, is that these jobs tend to be of “generally lower quality.”

Original post is Job Market Better-Looking in Rear-View Mirror by Political Capital.

Photograph by Spencer Platt/Getty Images

A worker is viewed through protective sheeting on the Brooklyn Bridge on April 30, 2013 in New York City.

The Labor Department said today that the economy added 165,000 jobs in April. With this kind of moderate-but-not-stellar growth in payrolls, is the Federal Reserve on track to meet its own forecast for its first interest-rate increase?

A simple calculation using the Atlanta Fed’s Jobs Calculator tool says yes.

We would need an average 160,310 jobs per month to reach 6.5 percent unemployment by June 2015.

A quick refresher: The Federal Open Market Committee repeated this week that it will keep interest rates “exceptionally low” as long as the unemployment rate is above 6.5 percent and inflation is projected to be no more than 2.5 percent.

When the FOMC first unveiled this guidance in December, it said the change was consistent with an expectation of keeping zero-rates through at least mid-2015.

The calculation above comes with a big caveat. It assumes  that labor force participation will stay at April’s 63.3 percent, which matches its lowest level since May 1979. Some of the decline in joblessness in the past few years can be attributed to people dropping out of the workforce.

If an improving economy emboldens more people to resume their job search, it will take much faster job creation to get
to 6.5 percent unemployment.

How much faster? If labor force participation grows to 64.2 percent — the rate in April 2011 — the economy would need an average 236,394 jobs per month. And if participation returns to a pre-recession level of 66 percent? We would need a super-charged monthly pace of 388,562.

Original post is Zero-Interest Fed: How Long? by Political Capital.

Photograph by Spencer Platt/Getty Images

A worker is viewed through protective sheeting on the Brooklyn Bridge on April 30, 2013 in New York City.

With the employment report today beating expectations – at 165,000 new jobs, above the widely expected 140,000 gain – the U.S. economy continues to chug along at a steady, though unexciting pace. The unemployment rate ticked down by 0.1 percent to 7.5 percent, and that’s good news too. So is the fact that job growth continued despite the dreaded sequester.

All this relatively good news doesn’t mean, however, that sequestration is having no impact. Earlier the Congressional Budget Office projected job losses of 750,000 on an annualized basis if the across-the-board cuts remained in force this year. So, the job numbers just reported surely would be somewhat higher – perhaps by 50,000 to 60,000 — without the sequestration.

There are other developments for the “half empty” crowd to worry about. Many workers are in less-than full time jobs, or in new jobs paying much less than they were used to. Productivity growth, the key to long-term living standards, has averaged well below 2 percent for the past eight years, compared with 3 percent recorded in much of the 1990s. Income growth continues to go almost all to the top of the income scale, according to the latest statistics. And economic growth itself is hardly earth-shaking: the early GDP report of 2.5 percent in the first quarter disappointed a market that was expecting 3 percent.

In short, the two political parties have plenty of economic ammunition to support their verdicts on the budget, President Barack Obama and the economy, further feeding the cynicism that has turned off so many voters outside the Beltway and contributed to political gridlock inside it.

As for the Fed, the new employment numbers probably won’t change the current sentiment to keep up the bond buying until the labor market improves a lot more. Inflation remains low, so the Fed critics have a hard case to make.

The Fed’s responsibilities remain daunting. It’s providing the only policy support for an economy that, given the sequester and other austerity measures advanced since the August 2011 budget deal, would be generating even less output and job growth than the weak improvements noted in the news lately.

Robert Litan is director of research at Bloomberg Government. Follow him on Twitter at @BobLitan.

Original post is Divided Views of U.S. Economy Remain with Jobs Report: BGov by Political Capital.