Archive for May, 2008

A Surplus of Jobs In Iowa

Kurt Brouwer May 31st, 2008

Unemployment has gone up a bit nationally, although at 5% it is still low by historical standards. Yet, in some parts of the country the problem is not having too many workers, but rather having too many jobs and not enough workers. That is the case in Iowa as this New York Times piece (free registration may be required) spells out [emphasis added]:

As Iowa Job Surplus Grows, Workers Call The Shots (New York Times, May 31, 2020, John Leland)

As rising unemployment and layoffs beset workers around the country, Iowa faces a different problem: a surplus of jobs. Or to put it another way: a shortage of workers. A survey of companies by Iowa Workforce Development, a state agency, found as many as 48,000 job vacancies, in industries including financial services — Des Moines trails only Hartford as the nation’s insurance capital — health care and skilled manufacturing. One estimate projects the job surplus to reach 198,000 by 2014, with vacancies increasingly in professional positions. Greater Des Moines alone faces a shortfall of 60,000 workers in the next decade.

The state provides a small, advance view of what some economists predict will be a broader shortage of skilled workers in the next 20 or 30 years, as tens of millions of baby boomers retire from the workplace, and the economy produces more new jobs than workers. Potential consequences include slower economic growth and competitiveness, as well as higher wages for skilled workers and greater inequality.

Estimates of the national shortage run as high as 14 million skilled workers by 2020, according to widely cited projections by the labor economists Anthony P. Carnevale and Donna M. Desrochers.

But other economists believe the number will be lower, as the labor market adjusts to changes in the economy and advancements in technology. The federal Bureau of Labor Statistics does not make projections about a labor shortage, but such estimates are often hotly contested because they are often used to support positions on immigration policy.

Iowa’s surplus arises from colliding trends: the exodus of young college graduates, a state economy that adds 2,000 jobs a month, low immigration and birth rates, and an image problem that makes it difficult to recruit workers from out of state. Iowans’ median age is nearly two years above the national figure, and the state is near the top in the rates of women in the workforce and workers with multiple jobs — further shrinking the pool of people who might be drawn into the market.

“It’s really a perfect storm,” said Elisabeth Buck, director of Iowa Workforce Development. Over the next decade, more than 70,000 workers a year will become eligible for retirement, with school enrollment — potential replacement workers — dropping by 20,000 since 1998, while the nationwide housing crisis makes it harder for companies to recruit from out of state, because potential employees cannot sell their homes.

Last year, the state added nearly 13,000 nonfarm jobs, in part because of growth in ethanol and wind energy, and lost 3,300 people from the workforce. With statewide unemployment at 3.5 percent, compared to a national rate of 5 percent, nearly everyone who wants to work and can work has a job. “We’re looking for ways to grow our population,” Ms. Buck said…

Based on the growth in jobs and the loss of workers, it’s hard to imagine they have any unemployment in Iowa. In an earlier post, we noted the same issue in Montana (see 2% Unemployment — The Greatest Story Never Told).

You may have noted in this story that the theme of Baby Boomer generation retirements came up. This is a demographic trend that will have profound impacts on many economic issues over the next few decades. In this case, the retirement of baby boomers (see First Baby Boomers To Retire Are Doing Well) leads to job opportunities for the next generation.

Job Climate For Class of 2008 Is A Bit Warmer Than Expected

Kurt Brouwer May 31st, 2008

Job Climate for the Class of 2008 Is a Bit Warmer Than Expected (New York Times, May 31, 2020, Kate Murphy) [NYT link requires free registration]

Given that the economy is flagging, this would seem an inauspicious time to be graduating from college and looking for full-time employment.

Job prospects this year, however, have been better than career counselors and recent graduates had expected. Employers are still extending offers, just not as many as last year.

Economists said the class of 2008 has been helped by employers concerned by the impending exodus of baby boomers from the work force. But they warn that the job market is going to get tougher as the full extent of the nation’s financial problems emerges, and they predict a growing inequality in access to employment between elite and lower-achieving students.

…Regardless, many in the class of 2008 have found employment. Preliminary surveys conducted by university and college career counselors indicate that the percentage of students who had found jobs by graduation was about the same as last year. The salaries were also comparable to last year, which, given inflation, could be interpreted as a decline…

As we have written previously (see The Peekaboo Recession — Is It or Isn’t It?), this is clearly an economic downturn, but not necessarily a recession. This story is another indicator that the economy is still chugging along. Companies and other organizations are hiring the same percentage of college grads as they did last year. That alone would be an anomaly in a recession. Also, they are paying the same salaries. Anyone who has been hiring college grads in the past few years knows that starting salaries have gone up considerably in the past few years. So, the fact that salary scales are the same (rather than falling) is also a sign that employers do not perceive the economy to be that difficult.

Via: BrothersJuddBlog

Honda Clarity FCX — Home Energy Station

Kurt Brouwer May 30th, 2008


Source: Honda

Bring It On

I love this illustration. It reminds me of ‘the home of the future’ magazine pieces from — dare I say it? — the 1950s or 1960s. Even though the world and the economy and our political system seem to be going through a rough patch, amazing things are happening. Companies such as Honda are quietly creating 21st century products such as the Clarity FCX and the Home Energy Station.

I have long felt that plug-in electric cars were the way to go because we all have electricity at home or the office and electricity is produced and distributed quite efficiently. Just imagine no more trips to the gas station to fill up. Just plug in your car when you’re home at night. What could be simpler?

Well, Honda has an idea they have been researching since 2003. And, they have taken the use of energy to power a car to a whole new level. Powering your car — and your home — from the same source.

Honda FCX Clarity - Home Energy Station (

Honda has operated an experimental Home Energy Station in Torrance, California, since 2003. The Home Energy Station, which generates hydrogen from natural gas, is designed to provide heat and electricity for the home through fuel cell cogeneration and to supply fuel for a hydrogen-powered fuel cell vehicle.

Honda has worked in cooperation with technology partner Plug Power, Inc., to reduce size and increase convenience in each subsequent generation of the Home Energy Station. In 2007 Honda developed Home Energy Station IV—which is even less expensive and better suited for home use than previous versions. CO2 emissions for a household using the Home Energy Station are 30% lower than those for an average household using a gasoline-engine car and commercial electricity…

The New York Times had a good review of this hydrogen-fueled vehicle [emphasis added]:

Hydrogen Car Is Here, A Bit Ahead Of Its Time (New York Times, December 9, 2020, Norman Mayersohn)

…Normalcy is a recurring, and intentional, theme of the FCX Clarity. It is refueled using a high-pressure connector tucked behind a typical gas-cap door on the rear fender. It has a handsome exterior, a nice audio system and plenty of knee room in the back. (A design analysis is at Anyone who has driven a Toyota Prius will feel at home with the dash-mounted gear selector and the park button.

Honda has not announced who will get the FCX Claritys or how many will be available in Southern California, where the program begins. Households will be selected, in part, for their ready access to hydrogen stations. Honda is realistic about the slow growth of a hydrogen infrastructure as well as the viewpoint that fuel cells may not seem to make much sense using current methods of hydrogen production.

But there are practical matters to consider as well: compared with alternatives like plug-in hybrids, the onboard energy supply is quicker to replenish and has a better travel range, 270 miles. Moreover, in Honda’s full-cycle calculation, a fuel-cell vehicle can reduce carbon dioxide output by half compared with a gasoline vehicle. In the United States, where much electricity is produced from coal, it is even better than a battery-electric car, Honda says…

Exciting isn’t it? Honda is doing this all on its own and I applaud the company’s effort on this. One thing many folks — and political leaders too — forget is that progress comes in uneven waves. Also, the reductionist or Malthusian approach to viewing the world (for example, the ‘Peak’ oil discussion) always fails to include technological breakthroughs.

Speaking of technological breakthroughs, can you imagine how great it would be to pull into your driveway and show off this hydrogen-fueled sedan to your family and friends?

Source: New York Times/Honda

Via: Donald L. Luskin

Regulators Step Up Probes of Trading In Oil

Kurt Brouwer May 30th, 2008

Hmmm. Interesting…

Regulators Step Up Probes of Trading in Oil Markets (Wall Street Journal, May 29, 2020, Ian Talley, Ann Davis & Gregory Mayer)

U.S. regulators disclosed a broad nationwide probe into potential oil-market manipulation and said they are expanding surveillance of energy markets.

The move Thursday by the Commodity Futures Trading Commission, including its unusual announcement of an investigation in progress, comes after crude-oil prices topped $130 a barrel last week and tested all-time highs. On Thursday, light, sweet crude for July delivery settled $4.41, or 3.4%, lower at $126.62 a barrel on the New York Mercantile Exchange.

Lawmakers in Congress have been pressing regulators to crack down on manipulation, as politicians seek to demonstrate ahead of the fall elections that they are responding to soaring gasoline prices.

“It’s important that people who are paying high gas prices understand the CFTC is on the case and that we’re closely monitoring and in this instance deeply investigating any potential abuse in this important energy market,” said Bart Chilton, a CFTC commissioner.

Many economists and oil-industry executives say possible shenanigans by market traders have little or nothing to do with the high price of oil. They maintain that the rise is mainly due to fundamental factors such as rising demand, constrained supplies and the weak dollar.

Still, suspicions have lingered that speculators have helped drive oil prices higher. At a series of congressional hearings over the past month, energy consumer groups and some financial insiders have contended that large investments in commodity futures by hedge funds and pension funds are distorting prices.

It may be true — and almost certainly is true to an extent — that trading by hedge funds and others have distorted prices in oil, but that kind of trading is not illegal. It may be speculative and potentially risky, but there is nothing inherently illegal about it. But, this sounds like a full-on Federal investigation into trading irregularities, which is Fed-speak for manipulation. That is, cheating.

...The CFTC’s announcement about its oil investigation suggested a single, broad probe that began in December 2007. But people familiar with its enforcement priorities say the agency is pursuing multiple oil investigations, and that many of them relate to one another…

This story has also been picked up by other media sources:

Feds Probes Possible Oil Price Manipulation (CBS News/Associated Press, May 29, 2020)

Federal regulators are six months into a wide-ranging investigation of U.S. oil markets, with a focus on possible price manipulation.

The Commodity Futures Trading Commission on Thursday said it started the probe in December and took the unusual step of publicizing it “because of today’s unprecedented market conditions.”

…the CFTC said it will immediately require monthly reports from institutional investors who manage funds designed to mimic the price of crude oil and other energy futures. The goal, the agency said, is to identify the amount of such index trading and to “ensure that this type of trading activity is not adversely impacting the price discovery process.”

The CFTC also said it has reached an agreement with its British counterpart and InterContinental Exchange Inc.’s Futures Europe to expand surveillance of energy futures contracts with U.S. delivery points, including the benchmark West Texas Intermediate crude, which trades on the New York Mercantile Exchange…

No doubt there is major pressure on regulators to make sure these markets are not being manipulated. This sounds like a response to that, particularly in the way the news of this investigation was released. It will be interesting to see how this pans out.

If Increased Gas Prices Means People Drive Less…

Kurt Brouwer May 30th, 2008

Interesting questions from the Carpe Diem blog:

Demand Curve Slopes Down Except In Politics (Carpe Diem, May 29, 2020, Mark J. Perry)

How is it that everyone complaining about high gas prices can see this simple relationship:

increased gas prices = people buy less gas…

but they cannot see these relationships:

increased minimum wage = people buy less minimum wage labor

increased business taxes = less business

increased capital gains taxes = less capital

~Comment from Bob Wright on this CD post

And, if you are feeling badly about U.S. gas prices, see GASENFREUDE.

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