You must certainly have heard or read about the Bureau of Labor Statistics’s disappointing Employment Situation Report by now. Disappointing because not only did the number of payroll jobs only increase by 115,000, generally considered below the “natural increase”, but the number of those looking for work declined. That’s the slowest level in seven months and should squelch whatever talk there was of robust recovery.
For the last several years we’ve seen a pattern in these numbers: strong growth during the winter months, sluggish growth in the spring and, frankly, I find that a bit puzzling. Counter-intuitive. I would think it should be the other way around.
I’m open to suggestions for an explanation. My working hypothesis is that it’s an artifact, i.e. that the actual real not-easily-measured number of jobs added is very low, indeed, and that the various fudge factors, e.g. seasonal adjustment, birth/death ratio adjustment, etc., are overwhelming reported figures. As I say, I’m open to suggestions for an explanation.
I’m sure that somebody somewhere is pointing out that increases in private sector employment are being offset by declines in public sector employment. Most of those declines are from the states and the fact of the matter is that the states are choosing to increase the compensation of their employees and, since they are in general required to balance their budgets, cut the number of employees to make up the difference.
Add to that that much of the growth in “private sector employment” is in the healthcare sector and approaching 70% of that is de facto public employment. That states are just choosing healthcare jobs over other sorts of jobs.
The decline in the “participation rate”, the proportion of people who are working, which has been declining since the start of the recession and which is wholly responsible for the misleading decrease in unemployment rate which otherwise would be in the teens has other implications as well as miserable people who have given up looking for work. For one thing it means that FICA revenues are decreasing which will speed up the point at which the SSTF goes TU. That’s the case because the amount of income subject to the tax is capped—high income individuals making more money doesn’t bring more money into the fun.