The latest jobs report from the Bureau of Labor Statistics threw a wet blanket on the propaganda party, the 2012 version, which had built up considerable momentum in the three months preceding that report. Not that this depressing report has stopped some economists from carrying out their main function in a modern society, which is cheerleading.
The March setback in hiring will prove temporary as the U.S. economy, in its third year of expansion, now is better equipped to overcome a slowdown in Europe and rising fuel costs, economists said.
Growing sales and profits may give business leaders the confidence to take on staff at a faster clip than last month’s 120,000 gain in payrolls, according to analysts at JPMorgan Chase & Co. and Deutsche Bank Securities Inc.
They say the data don’t signal a repeat of 2010 and 2011 — when hiring was derailed after promising starts by concern about government debt, energy costs and natural disasters — even though the total was weaker than all the estimates from 80 economists surveyed by Bloomberg News.
The job market these days is sort of like that old Catskills joke: The food is terrible, and the portions are so small.
The jobs are lousy, and there aren't enough of them.
More than half of all the jobs created during the past six months have been in low-paying industries such as retail and temporary help, Joseph Brusuelas, senior economist at Bloomberg LP, noted on Thursday...
The economy has created 1.2 million nonfarm payroll jobs in the past six months — great news.
But nearly 668,000 of those jobs — more than 55 percent — have been created in the retail, temp, "health care and social assistance" and "leisure and hospitality" sectors, notes Brusuelas.
These sectors account for only 29 percent of the total labor force, he adds, meaning that they take up a small portion of the economy, but are having an outsize effect on job growth.
I'm glad Bruselas undertook this analysis because frankly I was too lazy to do it myself. The thought of pouring through all the BLS data filled me with fear and loathing. Barry Ritholtz provided the details and a couple nice graphs. I've duplicated the first one below.
Improved hiring conditions and a decline in jobless claims are encouraging signs the economy is slowly healing. While these gains in the labor market may be sustainable over time, the quality of jobs driving this improvement is weak and confined to low-paying areas of the economy. This indicates that growth will remain somewhat weak throughout 2012. It also partially explains the lower rate of productivity gains observed over the past year...
While roughly 41 percent of the jobs created since 2010 are in the aforementioned low-wage sectors, they only account for 29 percent of the total labor force. Factoring in public sector job losses, these four low-wage-paying subsectors account for a whopping 70 percent of all gains during the past six months.
These sectors only accounted for roughly 25 percent of the job losses during the recession, well below the gains during the recovery and significantly below those observed over the past six months [see the graph below].
This points to a significant underutilization of labor resources in the current expansion and is one reason why Fed policy makers signaled they intend to remain accommodative over the next two years...
In short, a boatload of good-paying jobs were lost in 2008-2009, and about 70% of the new jobs created since the recession "ended" are low-paying jobs for waitresses, bartenders, retail sales clerks, and nursing assistants. Or they are temp jobs. And why does Bruselas think this is happening?
The ability to turn to cheap and productive labor outside the U.S., as well as the advanced skills demanded by many industries, has diminished the employment horizons for many workers.
The unemployment rate among workers with two or more years of college – the cohort most likely to be caught in the squeeze between demand for advanced skilled labor and the outsourcing of many professional office and back office jobs – while declining to 7.3 percent in February from 8.9 percent in September 2010, is still well above the 3.3 percent pre-recession low observed in November 2007.
Thus American society is further divided into the Haves and Have-Nots. Nothing to see here, folks. Move on, move on...
Should I state the obvious? Sure. Why not? This story got very little attention when it broke late last week just before the lousy BLS jobs report. I had been waiting for someone to report this "news" for some time now. The fact is that such stories render the jobs propaganda mute. It does not help the miraculous recovery story promulgated by politicians and mainstream economists if the quality of the jobs being created is terrible. So they must focus on the quantity of jobs, which is suspect because of BLS manipulations (aka. adjustments) of the data they collect. That's really all that's going on here. There's no mystery here.
The poor quality of the newly created jobs is used to explain why "consumer" spending is not booming. Important questions arise. Is it better to work your ass off in a lousy job that doesn't permit you to increase your spending? Or is it better to collect unemployment insurance, or live with your parents, or take on some student debt to postpone the inevitable day of reckoning when all your options run out? Obviously, the alternatives form a Hobson's Choice, which is to say no real choice at all.
People are very resilient. They are very good at finding ways to keep on going, keep on living, even if the quality of their lives keeps drifting toward the bottom. That's the Good News.