The Real Jobs Report: March 2014

 

The BLS Monthly Jobs Report for March is out. March nonfarm job growth was +192,000 and the unemployment rate remained steady at 6.7 percent. It failed to meet economist expectations.

The buzz was that job creation would come in at a minimum of +200,000; some speculated +250,000 or even +300,000 total nonfarm jobs for March. They predicted the unemployment rate would drop to 6.6 percent.

Wild speculation was based on the mistaken belief that bad winter weather retarded job creation. Economists believed that better March weather would open the flood gates to major job growth.

Such was not the case. Instead, in a surprise, job growth figures for January and February were revised up by +52,000 jobs. With the revisions, February’s job growth is higher than March! The winter weather theory is busted.

Bottom line, the U.S. economy remains in the doldrums. There is still job growth, but it’s sluggish. The number of unemployed last month actually increased by +27,000. There are a whopping 10.5 million unemployed with another 10 million more underemployed for economic reasons or who’ve given up entirely and dropped out of the workforce.

As it turned out, the giant payroll firm ADP was vindicated. ADP forecast March job growth at +191,000. Nobody believed them, but they hit the mark. ADP’s prestige for predicting future BLS job numbers just went up a notch.

View from the White House

Jason Furman

While today’s data indicates that the recovery is continuing to unfold, the President still believes further steps must be taken to strengthen growth and boost job creation
– Jason Furman,
White House Chairman of the Council of Economic Advisers, 4/4/2014

As always, Furman is pushing Administration policy. The Obama policy flavors of the month are:

• Reinstate extended unemployment insurance
• Raise the minimum wage
• Pass the Paycheck Fairness Act

Somebody needs to explain how these things will put Americans back to work. The Administration hasn’t had a real job creation strategy for five years.

Furman’s five “key” points this month are:

1. The private-sector added 8.9 million jobs in 49 months.
2. Job revisions are consistent with cyclical economic recovery
   
3. Long-term unemployment is demographically similar t short-term unemployment
   
4. Manufacturing hours worked went up 20 minutes to 42 hours/week
   
5. March employment gains are about the same as the last few years
   

As usual, Furman pulls out the Administration’s favorite cherry-picked statistic – private-sector job growth – and wave it around like an American flag. He ignores most everything else.

Furman’s last four points look like a feeble attempt to make a poor economy look good. Most likely, Furman hand-picked manufacturing hours to highlight because they are over 40 hours/week. He leaves out that average private-sector hours for all workers is only 33.7 hours/week.

The rest of the story…

Total jobs still below pre-recession level

Facts that the White House overlook:

• 853,000 fewer jobs now than before the Great Recession six years ago
• 8.5 million jobs were permanently lost in the Great Recession
• The rate of job creation today is slower than before the recession
  
• Job growth is only slightly more than population growth
• Labor participation remains stuck at its lowest level in three decades

Conclusions

U.S. job creation is weak. Job growth is slower than before the recession. It’s only slightly better than expected for population growth alone. After six long years, the recovery is still agonizingly slow.

There are over 20 million workers unemployed, underemployed for economic reasons or who are so discouraged they’ve dropped out of the workforce completely.

All three pieces of legislation being pushed by the Administration this month will cost more jobs than they create. Raising the minimum wage won’t create jobs. Equalizing pay won’t create jobs. They make life better for those that already have jobs, which is a good thing, but do so at the expense of creating new jobs for the unemployed.

Calling extended unemployment benefits job creation, like House Minority Leader Nancy Pelosi does, is the most dimwitted concept of all.

Unemployment benefits were never intended to create jobs. By design, they help the unemployed hang on until jobs return. True, UI benefits are immediately spent and that spending stimulates some job growth that helps. But the only way it can create enough jobs to make any difference is if there are far, far more people out of work in the first place. It’s a catch-22.

What’s needed is a real job creation plan. To bad the President and the Congress don’t have one.

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