JOB REPORT ROUND-UP
The job market is clearly still very weak. This morning’s non-farm payrolls report showed an expansion of just 115K jobs. We’re still operating well below capacity as the economy remains fragile at best. The good news is we’re growing. The bad news is we’re not growing nearly fast enough. Private payrolls jumped 130K and public payrolls declined 15K. The government is, despite its large budget deficit, dragging down growth in the labor market.
When compared with the 2002 recovery we’re operating about 30% below the rate of change seen in that recovery. From the 2002-2007 period (official recession end and start dates) we averaged 97K new jobs per month. This recovery so far is averaging just 73K jobs per month. 33 months into the 2002 recovery we were averaging substantially more than that with regular readings in the 250K+ range. This month’s reading of 115K shows a sharp deceleration from the last few months which had shown some signs of life.
All in all, it’s just more of the same old muddle through, boring low growth economy. It’s not a nightmare. But it’s also nothing to write home about. Muddle through continues….
Econoday has the details on today’s report:
“April jobs were softer than expected but there were upward revisions and the unemployment rate dipped to 8.1 percent from 8.2 percent in March. Seasonality issues apparently are still at play. Payroll jobs in April increased only 115,000, following increases of 154,000 in March (originally 120,000) and 259,000 in February (prior estimate up 240,000). The net revisions for February and March were up 53,000. Analysts expected a 165,000 increase for April.
Private payrolls rose 130,000 in April after a 166,000 increase the prior month. The consensus forecast was for a 178,000 advance.
Goods-producing industry employment rose 14,000 after a 38,000 boost in March. For the latest month, manufacturing increased 16,000; construction dipped 2,000; and mining edged up 1,000.
Private service-providing industry employment rose 116,000, following a 128,000 gain in March. The notable positive was a 62,000 increase in professional & business services. Retail trade rose 29,000 while health care gained 19,000 and leisure & hospitality increased 12,000.
The public sector continued to downsize with a 15,000 drop in government employment, led by a 10,700 decline in local government education.
Average hourly earnings were flat, following a 0.2 percent gain in March. Analysts expected a 0.2 percent gain. The average workweek for all workers in April was steady at 34.5 hours. Expectations were for 34.5 hours for April.
From the household survey the dip in the unemployment rate to 8.1 percent reflected a 342,000 decline in the labor force. Household employment fell 169,000. The median market forecast for the unemployment rate was for 8.2 percent in April.”
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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It is important to point out that February and March’s numbers were revised upward, by 19,000 and 34,000 respectively. It probably will be the same for this jobs report. That has been one of the more annoying features of the BLS report: everyone gets the news that the economy has performed poorly for the month, and then 1-2 months later it’s a decent or good report after all.
Calling this “muddling through” is sort of confirmation bias, no? If you lack work or are underemployed, which count into the tens of millions, then I doubt a muddle through meme has any resonance. If one looks forward, especially given the demographic trends of older folks working longer, thereby hurting entry level youngsters, then, even the generous muddle through description can turn on the dime to one of despair/disaster. WE need robust job growth NOW. This doesn’t even take into account the austerity mania infecting states and our national government.
I’ll be charitable myself and give way to the muddle through way of looking at where we are at present (I’m working, which frames my own personal outlook) but at some point not far off a muddle through economy just isn’t going to cut it. That makes me very nervous.
Somehow I get the feeling that the 8+ million people who have dropped out of the labor force in the last 4 years would take exception to you saying that it isn’t a “nightmare”. I struggle to see how what awaits us next year (regardless of who is president) will do anything to improve the capital formation environment in the US. Absent that, muddling through may be optimistic at best. The idea that raising capital gains taxes will not crush the investment needed to spur job growth seems disingenuous to downright moronic. But soldier on we must for our children’s futures.
Cheers
The company for which I work is off-shoring much of our US based manufacturing to its operations in Singapore. Some of the reasons are:
- low tax rates
- business friendly regulatory environment
- subsidies for a new plant (more capacity)
Singapore’s unemployment rate is 2.1%. With US unemployment over 8% (underemployment over 15%), why are we and our government in the US not emulating these types of policies?
http://www.guidemesingapore.com/research-reports/usa/doing-business-singapore-usa
Maybe because it’s easier to run a city-state than a continental one? This might be particularly true if the city-state in question has a population accustomed to and largely accepting of at least semi-authoritarian rule, and with a population that, while nominally multi-ethnic, is still a whopping 75 percent Chinese. Try that chewing-gum law in America and see how it works. One of America’s problems would seem to be that the place has become more and more unruly over time. One reason you can’t get America to emulate Singaporean policies is that you can’t get Americans to agree on much of anything.
Looking into the US corp tax issue further, I found a NY Times article which I think describes the issue fairly well. The article states:
“The United States is virtually alone in trying to tax its multinational corporations on their foreign earnings, but it allows companies to avoid those taxes indefinitely by keeping profits overseas. That encourages companies to use accounting maneuvers to shift profits to low-tax countries and to invest profits offshore…”
“The paradox of the United States tax code — high rates with a bounty of subsidies, shelters and special breaks — has made American multinationals “world leaders in tax avoidance,” … Because some companies are so effective at minimizing taxes, the average works out to far less than the official rate.”
“Many liberal groups counter that ending the breaks, subsidies and shelters in the corporate tax code could provide enough money to lower the rate several percentage points and still increase revenue…”
Note that it’s primarily the multinational corps that benefit from this scheme, and hence pay effective tax rates which can be much lower than the rates which (probably smaller) US businesses, who can’t easily/efficiently off-shore work, may have to pay.
Now, I can’t say I blame the multinationals for doing this, but how is it that this broken system is still in place? Are lobbyists who have been hired by the multinationals helping keep it in place to limit competition? Is it the liberal groups (PACs?) who believe keeping corp tax rates high will increase tax revenue?
It seems to me that if the average US worker understood that by lowering US corp tax rates, more jobs might be created/remain in the US (with likely no negative effects on revenue), we’d have few problems agreeing on what policy changes should be made. But those changes might not be politically possible if monied interests hold too much influence over our system of governance.
“It’s human nature that people are going to fight harder to preserve a benefit they already have than to get some new benefit,”
The entire article can be found at http://www.nytimes.com/2011/05/03/business/economy/03rates.html
Has anyone looked at the impact on work force participation of the 10,000 boomers a day retiring??? That’s 3.6 million people a year dropping out.
Yes, and then offset that with a few million entering the labor force.
The US labor force as a whole may not be growing much but it probably is not shrinking either.
PS: Don, the Chicago Fed estimates that about a quarter of the drop in the labor participation rate since the 2008 has been due to retiring boomers.
Bboomers retiring due to a lack of jobs. So much for passing on the generational wealth.