Jobs Report, Second Look

September 2nd, 2011 at 12:33 pm

OK, deep breath. 

The job market was weaker than expected in August, as employers added no new jobs, on net (this ‘net’ business is important—some jobs were created last month, some lost—this month, creation equaled loss, so net is zero).

There were some extraneous factors, but they don’t change the dismal result: the now-ended Verizon strike took 45,000 jobs out of the private sector count in August, but going the other way, 22,000 Minnesota state employees previously shut out, went back to work.

Since monthly numbers can always jump around, it’s important to average over a few months to get a feel for the trend.  The figure below does that for payroll jobs.

Source: BLS

You can clearly see the deceleration in job growth.  From Dec 2010-May 2011, we were adding around 150,000 jobs per month, not enough job growth to push down the unemployment rate, but about enough to hold steady.*  But over the past three months, we’re crawling along the bottom with 35K/month.  (Add in the factors noted above—strike, end of shutdown—and that number goes to 43K…no real difference.)

Other points of note:

–weekly hours fell slightly, another sign of weak labor demand;

–nominal hourly wages—before inflation—were down three cents;

–so, with fewer hours at lower hourly wages, weekly earnings were down about $3.30;

–over the past year, both hourly and weekly earnings are up 1.9%, considerably slower than inflation, up 3.6% (that’s July2010/July1011 on inflation, since we don’t have August price data yet);

–budget cuts led to more state and local employment layoffs again, as has been the case for 12 of the last 13 months (down 400K over that period).

In sum, very weak labor demand, no matter how you cut it.

First dose of Chad’s analysis here.  Details here.

*There’s a sleight of hand here—the job count that determines the unemployment rate is from a different survey, but the much larger payroll survey is more accurate, month to month.

Print Friendly, PDF & Email

4 comments in reply to "Jobs Report, Second Look"

  1. Anon says:

    This report is flat out pathetic.

    Wage deflation – check
    Idle resources with the skill destruction and misery that it implies – check
    Political and economic elites who won’t/can’t do anything about it – check

    Jared, you seem like an optimistic guy, but we are so screwed.


    • D. C. Sessions says:

      [q]Wage deflation – check
      Idle resources with the skill destruction and misery that it implies – check
      Political and economic elites who won’t/can’t do anything about it – check[/q]

      It IS going nicely, isn’t it? Come next November, the Democrats might as well not bother registering a candidate anywhere in the country for dogcatcher.

      At which point it’ll be about time to make some serious changes. The question is whether to get rid of Social Security first or taxes on capital gains.


  2. jonathan says:

    As even one comment here notes, the interpretation will be to cut more in the name of “freeing” the private sector. That means crushing the EPA, the SEC, etc. The illogic is contained in the comment above: cutting social security would decrease the amount of money people have, meaning a significant increase in poverty – some 2 million children, some 13 million elderly at a minimum – and thus a significant decrease in spending. All in the name of belief. It’s not even an ideology at the deepest level; it’s a belief.


    • D. C. Sessions says:

      [quote]The illogic is contained in the comment above: cutting social security would decrease the amount of money people have, meaning a significant increase in poverty – some 2 million children, some 13 million elderly at a minimum – and thus a significant decrease in spending.[/quote]

      So where’s the downside?

      Bear in mind that wealth is relative. If my portfolio is only losing a little bit and yours is wiped out, I’m ahead. Likewise, all of those foreclosures represent a golden investment opportunity for my REIT and the former owners begging on the street increase my relative social status (while giving me lots of opportunities for sanctimonious moralization.) I might even get some charity points by letting them polish the wax on my car for a couple of bucks.


Leave a Reply

Your email address will not be published.