Ed Yardeni says that something does not compute in the latest jobs report:
Payrolls rose just 38,000 during May, the weakest gain since September 2010, and the previous two months were revised downward by 59,000 collectively. However, something just doesn’t add up with these weak numbers.
Here’s his conclusion:
I think that in the worst-case scenario, the latest payrolls suggest that there may be a big skills mismatch between all those unfilled jobs and the available workers to fill them. More likely is that May’s weak report is misleading, though we are disturbed by the downward revisions in the prior two months.
Let me provide another alternative, one that is practically tautological, definitional: the wages being offered for the new jobs on offer are below the market clearing price. There are good reasons for businesses to do that, if only to bolster an argument for importing more H1-B workers.
In order to justify Dr. Yardeni’s hypothesis I think you need to probe a little below the surface of the larger number job openings. I’d like to see what the jobs were and what the employers were offering. Sadly, Dr. Yardeni does not provide any additional information.
I generally oppose the H1-B program, because it ties the worker’s ability to stay to their job, making them unable to negotiate for better pay and conditions. It is used to drive down wages, more often than not.
We shouldn’t have an H1-B lottery, we should have an H1-B auction — make it cost more to hire someone on a Visa, so that hiring an American is cheaper. Those cases where a specific candidate has skills that cannot be found locally will take care of themselves because those candidates are worth more.
A significant majority of jobs created the past two years have been in the hospitality industry. The proverbial bartender and waitress jobs. Non-food retail has not been far behind. This is published routinely, including zerohedge, where they lie by, well, by publishing the numbers.
If we see a sudden decline in job creation it might be wise to look to that sector in particular. And what have certain observers been saying about an increasingly tapped out consumer, and minimum wage increases? Consumer debt is rising, and the ability to force labor cost covering price increases waning.
Further, I have been pointing out a mismatch between job skills, and job attitudes, and needs. This leads to automation, and getting by with two people instead of three.
I can’t speak to the H1-B issue. To my knowledge none of our companies hire them. Nor do we employ off shore call centers and the like.
I don’t understand Yardenis surprise. Manufacturing has been in recession for a good year now. A before redefinition GDP is hobbling along at -.5 to .5 %. An unemployment rate not artificially propped up for 5+ years now by exits from the workforce is really probably 8%. U-6 perhaps 12%. The only indicators or sectors doing reasonably well are a stock and housing market created by the Fed, and subsidized health care and education sectors sucking the life out of all else at the cost of dead weight loss.
It couldn’t go on forever.