The Real Jobs Report: January 2014
The BLS Monthly Jobs Report for January is out. There’s as many conflicting opinions about what it means as there are economic pundits telling the story. Things are not always as we are told.
Total nonfarm jobs came in at only +113,000 in January. Economists had expected +180,000. The weather was blamed. The unemployment rate dropped a tenth to 6.6 percent, continuing a four year downward trend.
The news media is calling this month’s report disappointing. The White House paints a great big happy face on it. How would either know? The two most quoted numbers each month – nonfarm job creation and the unemployment rate – don’t mean what they used to.
Something no one reported is that all the job creation stats going back at least 10 years, probably longer, were recalculated this month. For example, total private sector jobs for February 2013 were reduced by -52,000. Other significant changes were made.
The recalculation isn’t purposely kept secret. Called the “annual benchmark revision“, it’s done every January. There is nothing sinister about it. What isn’t well-known is that the revision makes significant changes to all previous job tallies that, in many cases, invalidates monthly conclusions.
The one constant that remains, though, is the U.S. jobs depression continues.
View from the White House
The private sector has added 8.5 million jobs in 47 consecutive months of job growth
– Jason Furman,
White House Chairman of the Council of Economic Advisers, 2/7/2014
Since early in the 2012 election cycle the White House spin on the monthly jobs report has remained the same. Every month the White House quotes the number of jobs that the private sector has created. It proudly reports drops in the unemployment rate.
This month the smiley face is on 8.5 million private sector jobs created in the last 47 months. That number is +300,000 more than Furman reported just last month. That should confuse since it is nearly 200,000 more jobs than officially reported for January. How can that be?
Here are some sobering statistics the White House didn’t report:
- Total nonfarm jobs are up only +7.2 million jobs compared to +8.5M for the private sector
- There are -1.4 million fewer nonfarm jobs today than in October 2007
- There are -1.3 million fewer government jobs than in May 2010
- There are +3.3 million more Americans unemployed today than in February 2007
- Working age population has grown 12.3 million since October 2007
- The civilian labor force has grown by only 584 thousand since October 2008
- There are only 422 thousand more Americans with nonfarm jobs today than in October 2008
Many economists are blaming bad weather for low job growth the last two months. However, +48,000 new construction and +21,000 new manufacturing jobs last month contradicts that premise. Jobs are just scarce.
The Falling Unemployment Rate
Most folks know by now that the reason the unemployment rate is going down is because workers are dropping out of the workforce as if from a cascading waterfall.
Despite that there are 12.3 million more working age Americans than in October 2007, there are only +422 more nonfarm Americans working. That can only happen if millions have dropped out of the workforce or never entered it in the first place. Retirements in an aging workforce is also a contributing factor.
The employment-population ratio, labor force participation rate and the U6 unemployment are all improved this month. That’s good news. But, 58.8 percent for the employment-population ratio and 63 percent for the labor participation rate means they remain near their lowest levels in over three decades. That’s bad news!
Since the Great Recession GDP has bounced back. Stocks have never done better. Businesses have trillions stashed in their Federal Reserve QE-bloated coffers. Yet millions of Americans have left the workforce. The United States remains mired in a jobs depression.
In the State of the Union Address and other recent speeches President Obama has seriously proposed boosting pre-kindergarten education as a major effort toward lowering the unemployment rate, particularly among the disadvantaged. Unemployment is lowest among the well educated.
Thanks, Mr. President. That will help in about a quarter century after they graduate college.
In the meantime, instead of cherry picking job statistics every month, what are you going to do about creating more jobs today?