Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, March 21, 1994 TAG: 9403220026
SECTION: MONEY PAGE: E-6 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Medium
Is this ever good for present stockholders? It seems to me that the value would be watered down and it would be detrimental to present stockholders.
A: You are right that the value of your stock would be diluted. Increasing the number of shares, especially by the margin you indicate, would cut the value for present shareholders.
Most analysts would consider this detrimental to present shareholders unless management has plans for the new issue that would profit the company in the long run.
Decoding indicators
Q: I would like an explanation of four of the charts given in the Roanoke Valley Economic Indicators of the Feb. 22 issue of the newspaper. Please explain how all of the following can occur in the same month:
The number of people employed decreases from 130,000 to 129,600.
The area unemployment rate decreases from 4.2 percent from 3.9 percent.
The new unemployment claims increase from 214 to 532.
The active unemployment claims increase from 2,020 to 2,307
A: The source of all those figures is the Virginia Employment Commission, which offers the following explanation. The employment rates are based on surveys of businesses and industries. The claims are counted at local commission offices.
William F. Mezger, senior analyst with the commission in Richmond, said it often occurs that the number of people working decreases while the number of people unemployed drops.
The unemployment rate is a measure of the portion of people who are jobless out of the entire work force, which is a total of people with jobs and those actively looking for work. The explanation, he said, is that the total work force shrinks.
People are not counted as unemployed unless they are actively seeking employment. School cafeteria workers, for example, drop out of the labor force in the summer but they are not counted as unemployed, Mezger said. Knowing they will return to their jobs in the fall, they simply take off from work and thus shrink the labor force without being counted on the other side of the ledger.
On the other hand, students swell the labor force temporarily in the summer, when many actively seek temporary jobs.
Labor figures often lag as much as two months behind the period for which the statistics are collected. The report printed in the newspaper last Thursday, for example, was for January, the latest then available.
In December, Mezger said, construction and agricultural workers drop out of the labor force for the winter. The number of people working drops but, since there are few construction or farm jobs, the newly unemployed are not counted because they are not actively seeking work.
In the matter of claims for jobless benefits, Mezger said some manufacturing plants take vacations at Christmas time. Those workers who are not paid file new claims for unemployment benefits for that period.
New unemployment claims often are filed in anticipation of a layoff, so that particular indicator reflects conditions to come. An example of this is industries that traditionally take extended vacations, closing plants in seasonal slack periods as a way to control inventories. Mezger said people can be at work and still file for future benefits.
Mag Poff will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke 24010. Or leave a recorded message by calling (703) 981-3434 and when asked for a mailbox number, press 66639 (MONEY), followed by the # symbol.
by CNB