WHAT JOBS?
The March job report from the Bureau of Labor Statistics (BLS)--which supposedly showed the creation of over 300,000 new jobs--made a lot of people happy. Investors, with many of our readers no doubt among them, cheered as the stock market soared. The administration trumpeted the data as vindication of its economic policies. If job creation continued at that torrid pace for the rest of the year, the nation would be yanked out of its economic doldrums in a hurry.
Yet we sensed something fishy in the statistics. It is not for no reason that the old cliché places stats somewhere south of "damn lies." We decided to take a closer look.
What we found is of interest. During March, the unemployment rate actually ticked up, by two tenths of a percent. Only in the Alice-in-Wonderland fantasy world of Washington can a month in which unemployment rises be considered to show strength in job creation.
It's actually a positive, government spokespersons tell us. It means that the improved job market has caused more people to look for work, and therefore to report themselves as unemployed.
This is a very odd way of looking at it. But let's grant the government the benefit of the doubt and see if other statistics bolster their point. Consider the "employment
participation rate." That statistic is derived by adding the number of people working to those looking for work. If jobs are increasing, as well as the number of individuals newly on the hunt--as the government asserts--then logic demands that this figure should rise. It didn't. It's been in a prolonged decline and in March held steady at 65.9%, a 16-year low.
What else? How about these figures: total employment was unchanged at 138.3 million; the average workweek continued its downtrend, dropping another tenth of a point to 33.7, near a 40-year low; and non-seasonally adjusted wages fell across the board (eekly private sector wages dropped a significant 88 cents, to $523.70).
Moreover, if you check the BLS' own tables, you will find that men over the age of 20 lost 62,000 jobs, while women over 20 lost 142,000. Overall, unemployed workers who would like to work full time increased by 145,000, while those unemployed who would like to work part time rose 68,000. These data directly contradict the assertion that
March was a month of real job growth.
The reason for these discrepancies is twofold. First, the BLS always estimates and adds in "phantom" jobs, i.e. those created by small businesses that don't get counted. In March, they guessed that there were 153,000 of these. Well, maybe. And secondly, according to ex-Fed official Lacy Hunt, if you really dig into the data you discover that 96% of the new "jobs" (296,000) were temporary or part-time. They represent workers who would like full-time employment taking whatever they can get, hardly a sign of an
increasingly robust economy.
We believe, therefore, that it is still too early to forecast sustainable job growth, a precedent to a robust economic recovery. But one thing is certain: in a hotly contested election year, the incumbents can be counted on to spin economic information to their best possible advantage. Even more than usual, it would be wise to take anything that comes out of Washington with a grain of salt.
WHAT WE KNOW NOW column at:
caseyresearch.com |
