Saturday, December 7, 2013

Jobs Report: Lipstick on an Economic Pig

The jobs numbers for November are in and the folks down in DC, as usual, are bringing out the makeup kit to start putting lipstick on this economic pig.

From the summer of 2008 to the summer of 2013, how many NET new jobs were created to re-employ the 8.7 million who lost jobs during the Great Recession --- all while 18 million young people had been graduating from high school?

In a recent statement, Secretary of Labor Thomas E Perez said, "The November employment report continues the 45-month trend of private-sector job growth with 8.1 million new jobs created over that time."

So, not only were there not enough jobs created to make up for the jobs lost, not enough new jobs have been created to employ the 18 million people who would be first entering the labor force.

The Bureau of Labor Statistics reports that only 48.8 percent of the 3.2 million youth who graduated from high school last year were "in the labor force" (either working or looking for work).

And of all those "8.1 million new jobs created", many could also be included in the Bureau of Labor Statistics' JOLTS report (people being laid off, and rehired again) --- and many may include some of the almost 7 million multiple job holders.

One example might be, someone who has two jobs, gets laid off from one, but gets rehired for another 2nd job --- and it might only be for a low-paying part-time job at that. Roughly half the jobs that were added in the six months through October were in low-wage industries.

The BLS reports that, of the better paying jobs, federal government employment continued to decline (-7,000) in November; and that over the past 12 months, federal government employment has decreased by 92,000.

Yet the unemployment rate has AGAIN dropped, this time from 7.3% in October to 7% in November --- but how can that be?

Here are some basic stats from the Bureau of Labor Statistics' (BLS) most recent jobs report:

  • 7.0 percent for the U-3 unemployment rate
  • 10.9 million Americans counted as unemployed
  • The number of people counted as "long-term unemployed" (those jobless for 27 weeks or longer) is unchanged (again) at 4.1 million
  • The labor force participation rate is 63.0 percent
  • The employment-population ratio is 58.6 percent
  • There are 7.7 million Americans who are working part-time, but want full-time jobs

The government claims that the unemployment rate is now down to 7.0%, but the major reason for that is that people have exhausted their jobless benefits and are no longer being counted. This is what we can call "Obama math". Once you have exhausted your benefits and have not found a job, after 27 weeks you are called "long-term unemployed" --- but after 52 weeks, you are called nothing --- because according to the government, you no longer exist --- except as some secret statistic buried somewhere deep in the bowels of the Department of Labor. (Also read: Falling Jobless Rate Masks Long-Term Unemployment Disaster)

Of those who ARE still counted, the BLS reports:

2.1 million are "marginally attached" (not in the labor force, but wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.)

As a subset of the "marginally attached" --- 762,000 were "discouraged workers" (persons not currently looking for work because they [rightfully] believe no jobs are available for them. The remaining 1.3 million persons who are "marginally attached" had not searched for work for reasons such as school attendance or family responsibilities.)

NOTE: The BLS also continues to report "average hourly earnings" ($24.15 an hour or $50,232 a year) --- but this is very misleading because an "average" is skewed by upper-income people making millions a year. The Social Security Administration reports the "median wage" (meaning half earn less, half earn more) as $27,500 year --- or $13.22 an hour, if they worked a 40-hour week all year (even though the BLS reports that the average workweek for private-sector employees is currently 34.5 hours).

The "average" wage that the BLS reports better reflects what the "median household income" currently is, which many times relies on two or more wage earners per household.

And the 10.9 million that the BLS reports as unemployed is only about HALF who are actually out of work and want a full-time job (but the government puts their lipstick on this economic pig.)

Last month, the former Federal Reserve official Andrew Huszar challenged the Fed with an insider's "confession" in the Wall Street Journal. He had described the Fed's quantitative easing as "the greatest backdoor Wall Street bailout of all time."

The Federal Reserve has a target U-3 unemployment rate of 6.5%, in which they will have a reason to "taper" quantitative easing --- Quantitative easing (or QE stimulus), put simply, is free money (digital dollars created out of thin air) given from our central bank to the big commercial banks.

Soon AFTER Andrew Huszar's "confession" came the sudden and sharp drop in the U-3 unemployment rate --- from 7.3% to 7%. With this drop in unemployment, also came renewed appreciation for the Fed's wisdom and speculation about the future of QE stimulus (because now that the American economy can supposedly stand on its own two feet.)

Let's conclude with a quote attributed to George Orwell, "In an age of universal deceit, telling the truth is a revolutionary act".

* What's Your Story? 1.3 million long-term jobless Americans will abruptly lose their unemployment benefits just after Christmas, with another 2 million early next year --- because federal extended benefits will most likely not be renewed. Josh Mitchell at the Wall Street Journal wants to hear from the long-term unemployed:

"I'm writing a story on what happens to unemployed Americans when they're jobless benefits run out. How do they cope, particularly given they've been out of a job for so long and might find it harder than others to get a job. I'm trying to find people like this to tell their story and shed light on this issue."

** Here are some awesome charts and stats on the minimum wage

1 comment:

  1. ---- Update ----

    House Democrats put forward a budget plan that includes $25 billion for an extension of unemployment insurance, a provision that would be paid for by funding IRS tax collectors to go after delinquent taxpayers.

    But we all know that the House Republicans will let people like Mitt Romney off the hook!