Commentary on the March 2013 BLS Jobs Report

Today’s jobs report underscores the weakness of the economy’s crawl out of the depths of the “Lesser Depression” (LD), once again demonstrating that relying on private sector growth, even with massive and unprecedented Fed blowing up of a renewed financial sector and stock market bubble, is not going to set the U.S. economy on a path to broad based and sustainable prosperity, as CPEG has been saying for many years.

The “Current Employment Statistics” (CES) “Establishment” survey shows that non-farm payroll jobs expanded by only 88,000 in March far below economists expectations of 200,000 and well below the average 197,000 payroll job growth of the last 6 months (Sept. through Feb). Though this a one month number and there have been one month “summer declines” in job growth throughout this tepid expansion (in June-Sept. of 2010, July of 2011 and June of 2012), this is a striking decline after six months of steady (though far from adequate) growth that does not bode well.

Indicative of how terrible the current U.S. labor market is relative to the post-war period, the current average duration of unemployment increased to 37.1 weeks (from 36.9 in Feb.) roughly double the average length of unemployment for all prior recessions since at least 1948 – see New York Times (11/2/2012): “Jobless and Helpless, in America”. Job losses were recorded in retail trade and the U.S. Postal Service, The later lost 12,000 jobs in March – thanks to the massive “pension poison-pill” saddled on the Postal Service by the continued “destroy U.S. jobs” efforts of the Republican majority in the U.S. Congress, see:

We are more than 45 months after the official beginning of the “expansion” in June 2009 and still have not even recovered the jobs lost since the start of the LD in Nov. 2007. Figure 1 and Table 1 below show payroll employment change as a percent of starting employment for each of eleven post-war recessions, labeled by their official “Trough,” or start of “expansion”, date so that the LD is labeled June 09. As can be seen in the chart the longest previous post-war Nov. 01 “jobless growth” recession had none the less fully recovered recession job loss 38 months after its start. As the average postwar expansion is 59 months, if the current abysmal rate of employment growth in the current “jobless” LD continues, it appears highly likely that the U.S. economy will not add much employment, if any, to that prevailing in Nov. of 2007.

And reflecting the fact that we have an income as well as a jobs problem, average hourly earnings also declined in March to $20.03 from $20.04 representing a much larger real income loss of 4.3 cents an hour at the current 2% inflation rate.

As bad as the March payroll numbers look, the more comprehensive “Current Population Survey” (CPS) “household” survey that includes: agricultural workers, the self- employed, paid family workers, and private household workers is even more telling. March CPS employment (E) declined by 206,000 so that the official Unemployment Rate (UR) declined (from 7.7% to 7.6%) only because the official “Labor Force” (LF) declined even further by 496,000 ( UR = (LF-E)/LF) as the Labor Force Participation Rate (LFPR=LF/Pop) and the employment to population rate (E/Pop) both declined. The former was 63.3% in March 2013 versus 66% in Nov. of 2007, and the later was 58.5% down from 62.9% in Nov. 2007.

Using the more accurate and comprehensive U-6 “Alternative Measure of Labor Underutilization” (which includes workers who are no longer as in the official Labor Force and the part-time unemployed who cannot get full-time employment) the real unemployment rate is 13.8%, and the number of unemployed in the U.S. is almost 22 million people.

Finally to show how deep the LD is and how unlikely a real recovery is given the current course of relying on private sector growth plus continued Federal Reserve financial sector and Wall Street “pump priming” without a massive federally funded jobs program, Figure 2 below compares the employment that would be required to maintain the Nov. 2007 employment to population ratio (E/Pop=0.62932785) constant as population increased in subsequent months, to actual employment, based on BLS monthly “Civilian Non-institutional Population” and actual (CPS) Employment estimates. As can be seen in Figure 2, based on this measure there has been virtually no jobs recovery at all in the 45 month of “expansion” from the June 2009 LD trough. All of the relative “recovery” experienced by the U.S. economy in the last 45 months has been due to a larger share of the population not being included in the Labor Force (LFPR decline as noted above) and not to employment growth relative to population increase.

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