The headlines of the national employment report for the month of November, released this morning by the Bureau of Labor Statistics (BLS), seems to carry good news. The economy added 146,000 new jobs (according to the establishment survey, a figure just high enough to keep pace with growth in the labor force) and unemployment dropped another tenth to 7.7%.
But forget that nonsense. A closer reading of the report (link provided above) paints a very different picture. The household survey employment level actually fell by 122,000 jobs. The BLS had to rely once again on the “mysteriously vanishing labor force” trick to make unemployment appear to have declined. It claimed that nother 350,000 workers vanished. If, instead, one assumes that the labor force grows as the population grows, then unemployment actually rose by a tenth in November to 10.4% – the level it would be if you used this assumption each month for the past five years.
And if you believe that the BLS hasn’t been understating unemployment, then how do you explain the fact that, since unemployment hit its worst level of the recession in October 2009 – 10.0% – unemployment has supposedly declined by 2.3% while per capita employment (the employment level divided by the population) has only risen by 0.56%?
In fact, if you dig deeper into the report, you’ll find an even gloomier picture – one of an economy that’s gone nowhere in the past 12 months, as made clear by the following excerpts:
“The change in total nonfarm payroll employment for September was revised from +148,000 to +132,000, and the change for October was revised from +171,000 to +138,000.”
Regarding that one, isn’t it interesting how the figures for the past two months – figures that prevented the jobs report from being a big issue in the waning days of the election – are now revised downward? Here’s more:
“The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.8 million in November.”
“The civilian labor force participation rate declined by 0.2 percentage point to 63.6 percent in November, offsetting an increase of the same amount in October.”
This is corroborated by my own calculation of a decline in per capita employment. And more:
“The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 8.2 million in November, was little changed over the month.”
“In November, 2.5 million persons were marginally attached to the labor force, essentially unchanged from a year earlier.”
“Among the marginally attached, there were 979,000 discouraged workers in November, little changed from a year earlier.”
“Employment in construction declined by 20,000 in November, …. Since early 2010, employment in construction has shown no clear trend.”
“Manufacturing employment changed little over the month. Within the industry, job losses in food manufacturing (-12,000) and chemicals (-9,000) more than offset gains in motor vehicles and parts (+10,000) and wood products (+3,000). On net, manufacturing employment has changed little since this past spring.”
So where were the job gains? Primarily in retail trade, professional and business services, and healthcare. That’s good, but not a healthy sign when all of the growth is concentrated in just two narrow facets of the economy.
Economics is all about meeting the wants and needs of people. A healthy economy (especially one of our size) must be built around the whole process – including research and development, harvesting resources, manufacturing product, distribution, marketing, retail and countless other ancillary services. But that’s not what we’re seeing. All of our job growth is concentrated in the latter categories of distribution, marketing and retail. Why? Because the backbone of the economy – manufacturing – has been gutted by flawed trade policy. And as manufacturing goes, so too goes R&D, production of resources and even construction.
Economists celebrate the process of “creative destruction,” where old products are replaced by new and improved and more efficient ones. Since “creative destruction” most heavily impacts manufacturing and requires construction of new manufacturing facilities, it’s only logical that the construction sector of the economy is similarly affected if there are, thanks to our trade policy, far fewer manufacturing facilities that need refurbishing, overhaul or even replacement with newly constructed factories.
This employment report is just more verification that our economy has settled into the “new normal” of high unemployment and falling incomes. But this “new normal” is also one that has been propped up with extreme levels of monetary easing by the Federal Reserve and by deficit spending by the federal government. It’s what has enabled people to keep buying products to meet their needs, keping the retail, marketing and business sectors of the economy growing. It could soon get worse if and when all that stimulus dries up.
Regardless, the re-election of President Obama has assured that this will be the status quo for the next four years. He will continue the high rates of immigration that steadily worsen the imbalance in the supply and demand for labor, and he will do nothing to address the idiotic trade policy that has been bandrupting America for decades. (He promised to tackly trade policy during the campaign in 2008. He hasn’t.) All we have to look forward to is another four years of a bench-warmer, place-holder president.