THE ENTERPRISE
This is a long one, so sit back, get a cup of your favorite brew, settle in and get ready to have some misconceptions blown to hell...with opinions and data that are not mine alone.
FIRST--THINGS I WISH I HAD SAID OR WRITTEN:
From President Bush's State of the Union Address, the best line by far: "Hindsight alone is not wisdom. And second guessing is not a strategy." What a great, legendary line!! Take that, all you critics!
Next--The final paragraph of FORTUNE'S "Mastering the Art of Disruption" by Fred Vogelstein, (Feb. 6, 2006, pp. 23-24) on the subject of how Steve Jobs continues to move across the technology and entertainment landscape, out-smarting or out-innovating or out-performing nearly everyone else. Specifically on his role in orchestrating the Pixar acquisition by Disney and how his influence will grow as he joins Disney's board. Vogelstein writes, "...In the process, Jobs would get an even bigger landscape to gallop across--and a much bigger horse. Imagine the possibilities for disruption with the resources of both Apple and Disney at his disposal. Overnight the iPod could get deeper access to ESPN as well as the entire library of Disney films and ABC television shows. Can you feel the tremors?"
I do feel the tremors, and I bet a lot of others feel those big footsteps coming. This is the best thing that has happened to Disney in years. It won't be bad for Apple either, and as a long time Mac user, that's fine with me too.
MORE ON JOBS, AND I DON'T MEAN STEVEN THIS TIME
Ever heard of JOLTS? The Bureau of Labor Statistics of the U.S. Department of Labor conducts a monthly survey called Job Openings and Labor Turnover Survey (JOLTS). It involves the collection and publishing of job openings and labor turnover data sampled from establishments on a voluntary basis, including employment, job openings, hires, quits, layoffs and discharges, and other separations.
The number of unfilled jobs--used to calculate the job openings rate--is an important measure of the unmet demand for labor. With that statistic, it is possible to paint a more complete picture of the U.S. labor market than by looking solely at the unemployment rate. BLS only began collecting this data in Dec. 2002, so we can't make historical comparisons, but it offers some real eye-openers. . You can go to the source yourself at
On the last business day of November 2005 (latest data), there were 3.9 million job openings in the US, and the job openings rate was 2.8%. The job openings rate did not change significantly in November, but has generally trended upward since September 2003 from below 2%. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. So, by this measure, the job market is 40% better than it was two years ago. Of course, we do not known how good the market was in 1999, so this may be misleading. But the recent trend is quite good.
How about the fact that 4,586,000 people found a new job in November, but then 4,337,000 needed to find new jobs, as they left their old jobs for one reason or another. A whopping 2,612,000 people left for presumably greener pastures. 1,498,000 people heard Donald Trump's famous line, "you're fired" or were simply laid off. Can you imagine that between quits and layoffs, roughly 1.1% of the country lost a job they presumably wanted to keep in just one month! That translates into over 10% of US employees in any one year losing a job. 249,000 more people were hired than fired.
Most amazingly (to me) 3.4% of the country found new jobs in just one month, and almost 40% of employees this year will change jobs. Now, this is not getting promoted to a better position or moving from one position in a company to another, but changing the actual firm for which they work. Of course, a lot of the job fluidity can be explained by younger people changing jobs, temporary seasonal help and so on. We need to create a net new 150,000 jobs a month or so to keep the unemployment rate from rising, due to growth of population, etc. But that aside, the data points to a remarkably dynamic and fluid job market in the US. It also means that we are creating a lot more than 150,000 jobs a month. More like a few million, but we are losing a few hundred thousand less than that few million.
For a lot of America, employment is not a certain prospect, and old fashioned lifetime employment is more rare than ever. Perhaps this explains why the wiser route is portable retirement vehicles like 401(k) plans, and portable health insurance plans.
Statistics like these illustrate why simplistic media or politicians hype about jobs leaving the US or the unemployment rate is just the outer edge of a very interesting onion. Peeling away layer after layer shows a very different story (and may make your eyes water too.)
EVIDENCE THAT REPORTS OF THE DEMISE OF THE US MIDDLE CLASS IS A MYTH...
GREAT AMERICAN DREAM MACHINE
By STEPHEN MOORE and LINCOLN ANDERSON
WALL STREET JOURNAL December 21, 2005; Page A18
New reports by the Census Bureau and the Fed on the economic well-being of the typical American family reveal that over the past three decades, the vast majority of families have experienced a rapid growth in their income and wealth. Now that nearly six out of 10 households own stock and two out of three own their own homes, the average family -- for the first time ever -- has net worth (assets minus liabilities) of more than $100,000. Median family income has climbed to more than $54,000 a year.
Almost no one in the national media has taken notice of this good news, which has been camouflaged by a barrage of misleading and gloomy stories on "stagnant wages," "the growing income gap between rich and poor," "the disappearing middle class" and "rising poverty in America." The reality is that if the economic growth, employment and family-finances numbers get any better, the media will soon have to start calling this the "Clinton economy."
What the reports tell us is that the vast majority of Americans have not bumped into income glass-ceilings, but rather are experiencing an astonishing pace of upward income mobility. The Census data from 1967 to 2004 provides the percentage of families that fall within various income ranges, starting at $0 to $5,000, $5,000 to $10,000, and so on, up to over $100,000 (all numbers here are adjusted for inflation). These data show, for example, that in 1967 only one in 25 families earned an income of $100,000 or more in real income, whereas now, one in six do. The percentage of families that have an income of more than $75,000 a year has tripled from 9% to 27%.
But it's not just the rich that are getting richer. Virtually every income group has been lifted by the tide of growth in recent decades. The percentage of families with real incomes between $5,000 and $50,000 has been falling as more families move into higher income categories -- the figure has dropped by 19 percentage points since 1967. This huge move out of lower incomes and into middle- and higher-income categories shows that upward mobility is the rule, not the exception, in America today.
It is true that the median-income numbers have fallen slightly in recent years. But this has been the pattern during virtually every recession and immediate post-recession period of the last 40 years. Median-income growth stalls, and then when the recovery picks up steam, incomes resume their inexorable march upward. That is why the long-term trend is what we should be paying attention to. And examining this data leaves no room for argument: The middle class has not been "shrinking" or losing ground, it has been getting richer. For example, the Census data indicate that the income cutoff to be considered "middle class" has risen steadily.
Back in 1967, the income range for the middle class (i.e., the middle-income quintile) was between $28,000 and $39,500 a year (in today's dollars). Now that income range is between $38,000 and $59,000 a year, which is to say that the middle class is now roughly $11,000 a year richer than 25 to 30 years ago. This helps explain why middle-income families can buy things like cable TV, air conditioning, DVD players, cell phones, second cars and so on, that were considered mostly luxury items for the rich in the 1950s and '60s.
The upper-middle class is also richer. Those falling within the 60th to 80th percentile in family income have an income range today of between $55,000 and $88,000 a year, which is about $24,000 a year higher than in 1967. This rapid upward income mobility indicates that the great American Dream, in which each generation achieves a higher living standard than their parents, is alive and well.
[NOTE: several paragraphs on positive wealth creation and negligible change in poverty levels were omitted. The entire editorial is at: http://online.wsj.com/article_print/SB113513427028228173.html, or I can email the full text]
Mr. Moore is senior economics writer and a member of the Journal's editorial board. Mr. Anderson is chief economist at LPL Financial Services.
IF YOU ARE STILL WITH ME...THIS IS THE "CLOSER"...AMERICA IS STILL "THE LAND OF OPPORTUNITY"
-----Excerpted from "The Nation of the Future"
By David Brooks in The NYTimes
"Everywhere I go people tell me China and India are going to blow by us in the coming decades. They've got the hunger. They've got the people. They've got the future. We're a tired old power, destined to fade back to the second tier of nations, like Britain did in the 20th century.This sentiment is everywhere - except in the evidence. The facts and figures tell a different story.
Has the United States lost its vitality? No. Americans remain the hardest working people on the face of the earth and the most productive. As William W. Lewis, the founding director of the McKinsey Global Institute, wrote, "The United States is the productivity leader in virtually every industry." And productivity rates are surging faster now than they did even in the 1990's.
Has the United States stopped investing in the future? No. The U.S. accounts for roughly 40 percent of the world's R. & D. spending. More money was invested in research and development in this country than in the other G-7 nations combined.
Is the United States becoming a less important player in the world economy? Not yet. In 1971, the U.S. economy accounted for 30.52 percent of the world's G.D.P. Since then, we've seen the rise of Japan, China, India and the Asian tigers. The U.S. now accounts for 30.74 percent of world G.D.P., a slightly higher figure.
What about the shortage of scientists and engineers? Vastly overblown. According to Duke School of Engineering researchers, the U.S. produces more engineers per capita than China or India. According to The Wall Street Journal, firms with engineering openings find themselves flooded with résumés. ....
... What about America's lamentable education system? Well, it's true we do a mediocre job of educating people from age 0 to 18, even though we spend by far more per pupil than any other nation on earth. But we do an outstanding job of training people from ages 18 to 65. At least 22 out of the top 30 universities in the world are American. More foreign students come to American universities now than before 9/11.
More important, the American workplace is so competitive, companies are compelled to promote lifelong learning. A U.N. report this year ranked the U.S. third in the world in ease of doing business, after New Zealand and Singapore. The U.S. has the second most competitive economy on earth, after Finland, according the latest Global Competitiveness Report. As Michael Porter of Harvard told The National Journal, "The U.S. is second to none in terms of innovation and an innovative environment."
What about partisan gridlock and our dysfunctional political system? Well, entitlement debt remains the biggest threat to the country's well-being, but in one area vital to the country's future posterity, we have reached a beneficent consensus. American liberals have given up on industrial policy, and American conservatives now embrace an aggressive federal role for basic research. ...
... America's problem over the next 50 years will not be wrestling with decline. It will be helping the frustrated individuals and nations left so far behind."
Nice job David. I think you nailed it. I hope all of you who read THE ENTERPRISE have a new and different perspective now. It is time to start building--not tearing down. Let's get going.
Best, John
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