Employment Numbers an April Snow Job
Donald Trump managed to shove his way into the spotlight again last week, claiming the US is heading for “a massive recession.” Unsurprisingly, the mainstream media scoffed at Trump’s assertion, pointing to the “great jobs report” that came out Friday.
The report did show the US economy added some 215,000 jobs, slightly more than expected. But once again, the headlines only tell a little piece of the story. And once again, most mainstream media and financial analysts are ignoring the bigger picture. In fact, all of the positive spin about a great employment outlook is nothing more than an April snow job. As Peter Schiff succinctly put it in his recent podcast, this was not a good jobs report:
We added the jobs we don’t want; we lost the jobs we do want. That is the real story. It’s the story nobody wants to tell. Everybody wants to talk about the number as if this is some kind of economic miracle.”
As was the case the month before, part-time jobs drove the increase. When you dig into the numbers, you find 127,000 of the new jobs went to people who already had at least one job. In other words, 60% of the new jobs were filled by people who were already employed. That means the vast majority were part-time. That doesn’t take into account people who had no job and took a part-time job as their first job. So well over 60% of the new jobs added in March were part-time jobs.
When you break it down, the full-time unemployment rate rose from 4.9 to 5.1% while the part-time rate dropped from 4.9 to 4.8%. Meanwhile, the 29,000 manufacturing jobs lost was the highest number since 2009.
Peter gave the perfect explanation for what’s going on with the job market in his podcast.
Those [jobs lost] are our best paying jobs. At the same time, the number of waiters and waitresses surged to an all-time record high. This is what’s going on. Let’s say you’re a waiter and your employer will not let you work full-time…because he can’t afford the benefits; he can’t afford the Obamacare…What do you do? You find another restaurant and you get another part-time job. That’s why we created 215,000 jobs.”
Still, a few people out there are questioning the traditional narrative and warn that the employment picture is blurrier than the headlines imply. As a CNBC article pointed out, most analysts and pundits focus on the official labor department unemployment rate, known as U3. It is the source of all the good news. But there is another metric known as U6. It encompasses not only the unemployed, but also “persons marginally attached to the labor force, plus total employed part-time for economic reasons, as a percent of the civilian labor force.”
That number doesn’t look nearly as good. While it has shown some improvement in the last couple of years, as the CNBC article put it, “it remains stubbornly at pre-recession levels.”
The U-6 number actually rose slightly to 9.8% in March. But even that doesn’t tell the full story, as CNBC pointed out:
Despite the improvement that government statistics show, some economists think the real employment situation is much more dire. They point to the labor participation rate, which measures the portion of eligible Americans who are counted among the ‘labor force’ in calculating the unemployment rate. The participation rate fell dramatically since the recession…”
In other words, part of the reason the unemployment rate is low is because so many people have simply dropped out of the workforce. They are no longer officially counted as “unemployed” even though they are not working.
There is another wrinkle in the jobs report few people reported. One of the indicators of future hiring is starting to lag according to John Canally, an economist and market strategist at LPL Financial:
Three months in a row temporary help has been very weak, just up 4,000 in March. That’s a leading indicator.”
A rise in temporary workers generally signals employers anticipate making long-term hires. Canally said there was a surprising decline of more than 55,000 temp workers in January and February combined.
So, when you put it all together, we once again have a lot of bad news on the employment front, packaged up in pretty wrapping paper. Say what you will about Trump, he may well be right about the recession.
This post is part of our ongoing series Data Dependent: Reading Between the Lines, where we examine the real economic data not reported in the financial media. Click here to read all our articles in this series.
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