Welcome to the 'New Normal' Economy
There are actually a few on the left who are excited about the February jobs report which saw 236,000 jobs added and the unemployment rate drop to 7.7%. Most, however, are as glum as the rest of us.
February’s numbers were better than the average job creation for the previous three months. But don’t break out the bubbly. We are still in a debilitating jobs recession. As these charts show, while corporate profits and the stock market are setting records, we still have 3 million fewer jobs than we had at the start of the recession. In a typical post-war recovery, the U.S. economy now would have had about 10 million more jobs than at the recession’s start.
The BLS statistics reflect this gloomy reality. There are still more than 20 million people in need of full-time work. Of those, 40.2 percent remain long-term unemployed (jobless for 27 weeks or more). February’s job growth did not budge the low employment-population ratio of 58.6 percent. At 13.8 percent, African-American unemployment remains more than twice the level of that of whites.
The election is over. No need to spin the bad news. Time to face reality and reach the conclusion that AEI's James Pethokoukis has reached:
Now here’s some of what those headline numbers miss:
1. In January 2009, Team Obama economists predicted that the unemployment rate by 2013 would be 5.1% (and the economy would be booming at 4% annual growth). Heck, even without the stimulus, they thought the jobless rate would be down to 5.5%. That’s a big miss.
2. The labor force participation rate fell again as potential workers stopped looking for work. If the LFP rate was just where it was a year ago, in February 2012, the official unemployment rate would 8.3%. And if the LFP rate was where it was in January 2009, the unemployment rate would be 10.8%. Does the the aging of the US workforce make that 2009 number less relevant? Probably. But have demographics changed that radically over the past 12 months? Doubtful.
3. The February U-6 number, the broadest measure of unemployment and underemployment, was down a tick to 14.3%. This probably gives a better feel for the real state of the labor market.
4. During the past three months, the economy has added an average of 191,000 jobs. At that pace, according to the Jobs Gap calculator from the Hamilton Project, it would take 101 months to return to pre-Great Recession employment levels while also absorbing the people who enter the labor force each month. Oh, and that calculation assumes no recessions between now and late 2021.
5. The share of the unemployed out of work for 27 weeks or longer increased to 40.2% from 38.1% in January.
6. The employment-population ratio is exactly where it was a year ago, at an almost rock-bottom 58.6%.
The bottom line here is that the US labor market is treading water at best, with the falling labor force participation rate number hiding that sorry reality. To get excited about these jobs numbers really is to embrace the slow-growth New Normal reality. The economy continues to grow too slowly to really crank up the American Job Machine. Boosting growth in smart, supply-side way should be the top priority of the White House and Congress.
It'll never happen, James.
Meanwhile, Market Watch has some interesting facts and figures about part-time work:
According to the household survey (on which the unemployment rate is based), the economy added a healthy 170,000 jobs. The survey also shows a tremendous increase of 446,000 part-time jobs.
What this means is that the economy actually shed 276,000 full-time jobs.
The Bureau of Labor Statistics labeled those 446,000 part-time jobs as "voluntary,” but I am not so sure.
A Gallup survey on jobs released Thursday shows the percentage of workers working part time but wanting full-time work was 10.1% in February, an increase from 9.6% in January and the highest rate measured since January 2012.
Gallup notes "Although fewer people are unemployed now than a year ago, they are not migrating to full-time jobs for an employer. In fact, fewer Americans are working full-time for an employer than were doing so a year ago, and more Americans are working part time.
Although part-time work is clearly better than no work at all, these are not the types of good jobs that millions of Americans are still searching for.
Obamacare is in play. Recall that under Obamacare, the definition of full-time employment is 30 hours. The BLS cutoff is 34 hours. At 30 hours, companies gave to pay medical benefits so they have been slashing the number of hours people work. This reduced the number of hours people worked and provided an incentive for many to take on an extra job.
We can see the effect in actual BLS data.
After declining for years, the percentage of those working two or more jobs is again on the rise.
In the past month there was a surge of 679,000 in the number of people working multiple jobs. The seasonally-adjusted increase was 340,000. (Emphasis added)
This is the new normal US economy; a part-time, shrinking workforce with manufacturing and other well-paying jobs disappearing and many forced to work multiple jobs just to keep their heads above water.
You cannot continue to blame all of this on the financial meltdown of 2008 and the housing crash. Profits and the stock market are way up. Businesses have indeed, recovered.
But President Obama's policies have made it too expensive, too risky, to hire additional workers and have even forced companies in some industries to eliminate full time jobs in favor of part-time employment. This trend is only going to continue throughout the year as the full impact of Obamacare begins to have its effect on the economy.