The Real Jobs Report: April 2013
A big black cloud yet hangs over this month’s BLS April Jobs Report.
To be sure, for a sluggish economy, there was thankful news in the report. Unemployment ticked down a notch to 7.5%, its lowest level since December 2008. +165,000 new jobs were created.
The number of jobs created is more than expected. More impressive, the job creation numbers for both February and March were also revised significantly upward. That makes this month’s increase even better given it is above and beyond the increases in the previous months.
The stock market went crazy. The DOW topped the magical 15,000 barrier before closing at 14,974… another new closing record.
But it just puts lipstick on a pig. BLS data clearly shows the jobs picture is much different.
What Kind of Jobs are Being Created?
In 2008 and early 2009 the number of Americans working part-time for economic reasons exploded from 4.3 million to 9 million. It more than doubled.
Since then that number has dropped only by 1 million jobs. That means today there are over three million more Americans still glumly working part-time for economic reasons than before the Great Recession.
The Great Recession began in December of 2007. U.S. total employment topped out at 146.6 million jobs in November 2007. Today there are still 3 million fewer total jobs in the United States than November 2007.
Furthermore, since job recovery finally began in January 2010 there have only been 5 million jobs recovered of the 8+ million lost. Account for population growth of 12 million and things are worse.
These numbers and those that follow are strait off the April Jobs Report databases.
Comparing Two Post-Recession Recoveries
To fully gauge the current jobs picture, it is more accurate to look beyond the short-term monthly stats that vary wildly from month to month. A wider apples-to-apples comparison of jobs numbers works better.
Fortunately, a convenient comparison just happens to be available. It is between the 5 year and 5 month period before December 2007 and the 5 year and 5 month period since then.
As of April, it has been 5 years and 5 months since the Great Recession began in December 2007. That length of time is perfect because the previous 5 years and 5 months before that, the United States was recovering from the smaller 2002 tech-bubble recession.
Here is how the two recoveries match up:
It is clear that a large portion of the 5 million jobs created since December 2007 have been involuntary part-time jobs taken for economic reasons.
Despite population growth of 12 million, there has been a disturbing decline in labor force growth of under 1.5 million. Before the current recession the labor force grew by 9 million. Labor force participation was in decline before the recession, but the decline greatly accelerated downward 4.5 times faster.
Before December 2007, during the tech-bubble recession recovery, the number of employed increased by 9 million. In this recovery it only increased by 5 million and there are still 3 million fewer workers employed.
After the tech-bubble recession, unemployment recovered and dropped by 1.1%. In this recession unemployment has not yet recovered and remains a whopping 2.8% higher than in November 2007.
Despite Wall Street’s enthusiasm, under the hood the jobs picture is still exceptionally bleak.
An apples-to-apples comparison with the tech-bubble recession and accounting for population growth shows a permanent loss of around 10 million jobs. That is no reason for celebration. Population growth will eventually fill the gap.
There has been some recovery over the last several years and jobs are slowly drifting back, but at about the rate expected from population growth alone. The new jobs are low-wage or often part-time.
April’s jobs report shows it. Most of the +168K new jobs were in low-wage industries like hospitality and leisure, food services and temporary services.
Globalization, automation and the aging of America has permanently altered the jobs landscape in the United States. There are fewer jobs to support more people. How the United States readjusts to the new reality will determine its long-term economic viability.
Just like in 2008, Wall Street will keep on dancing until the lights go out again.