The Boom in the Midst of a Malaise

It’s Friday afternoon and the sidewalks at Main Street and Roosevelt Avenue in Flushing, Queens are saturated with bargain hunters.  Awning-draped storefronts and their street vendor competitors vie for shoppers’ attention while commuters, arriving on the 7 train, veer off the walkway to maneuver around the slower-footed traffic here at New York City’s third-busiest pedestrian intersection.  

 
The small retailers at the center of the cacophony of commerce form the spine of this largely Asian immigrant community that has seen job growth and new businesses throughout the Great Recession and its aftermath.

 
While much of Queens flounders with low investment this neighborhood’s retail economy is the force behind its steady expansion. 

 
“Unlike some other areas we don't have vacant store fronts,” said Grace Meng, Flushing’s representative in the New York State Assembly.  She adds, “I think it is because we have a lot of small businesses and many of them are first generation immigrants who really work hard.”

 
According to a report from the New York State Comptroller Flushing experienced continuous job gains from 2005 through the end of 2010.  This was the result of a decade of new businesses and entrepreneurs setting up shop.  In 2009 there were almost 40 percent more companies operating here than 10 years before.

 
While some of this growth is attributable to the entrance of large retailers, such as Target, Old Navy, and Best Buy, this community – where 90 percent of companies have fewer than 10 workers – continues to depend on the energies of its more diminutive enterprises.

 

Will Baby Boomers Fix Unemployment?

Maybe the recent drop in the job market’s participation rate wasn’t entirely due to discouraged workers giving up on finding a job.
 
Earlier this month the Bureau of Labor Statistics (BLS) released a lower unemployment figure and the component data showed that it was a result of both an increase in jobs and a decrease in the number of potential workers.  When examining these numbers I assumed the decrease was due to frustrated job seekers putting their searches on hold.
 
But according to a recent Bloomberg article some of the drop in the overall size is of the workforce is because baby-boomers are starting to hang up their business suits for good.
 
Think of all those 50 and 60-somethings.  As they retire opportunities arise for the jobless. And, because their numbers are large and their unemployment rate relatively low, many additional jobs will become available as more hit the 65-year milestone.
 
There’s one caveat that is important to note, however.  A retirement decision is often contingent on the performance of an investment portfolio.  The stock market, although still showing volatility, rebounded well from its low in 2009.  But if a future shock – like a unexpected European sovereign default – causes equity prices to plunge potential retirees may decide to stay in their occupations well past their 65th birthday.
 

IRS Is Getting In The Way

The federal government allows job seekers to deduct from their taxes costs incurred while looking for work, according to a recent press release from the IRS. 

Travel expenses or fees to employment agencies can amount to a significant chunk of cash for the unemployed, particularly at a time when every extra dollar becomes increasingly valuable. Fortunately a tax write-off can lesson the burden of these costs and, for some, keep these job placement avenues available.

But, as always, there’s a catch. You have to be seeking employment in the same field as your previous occupation.

The problem is that in today’s shifting economy many of the more than 13 million unemployed workers come from shrinking sectors where new job openings are often accompanied by crowds of other applicants.  As jobs in manufacturing contract, for example, the best option for those unemployed workers is often to find a new career in a different field.

But by taxing funds used toward finding a job outside of one's established trade, the federal government is, in effect, providing a disincentive for workers to move toward the most dynamic and efficient businesses.

Job Gains But Fewer Workers

The Bureau of Labor Statistics (BLS) released its November employment report on Friday revealing a seemingly promising drop in unemployment as job seeker rolls reduced by 594,000.  This new data generated a jobless rate of 8.6 percent, down four-tenths of a point from last month and 1.2 percent year-to-year. 

But fewer unemployed workers doesn’t necessarily mean more people have jobs.

Further into the report the BLS stated, “the number of unemployed persons, at 13.3 million, was down by 594,000 in November. The labor force, which is the sum of the unemployed and employed, was down by a little more than half that amount.”

So over half of the workers accounting for the drop in the official unemployment rate didn’t find jobs.  Instead they stopped looking for work.