More Bad News From The Jobs Front

Paul Craig Roberts

The Bureau of Labor Statistics headline this morning reads: “Payroll employment increases by 248,000 in September; unemployment rate declines to 5.9%.”
How can this be? As I reported yesterday, US corporations are investing in buying back their own stocks, not in new business ventures that produce new jobs.

According to the Census Bureau’s Poverty Report, US real median family income has declined to the level of twenty years ago.

Consumer credit and real retail sales are not growing. Construction is limited to rental units. Construction shows 16,000 new jobs, half of which are “specialty trade contractors” or home remodelers.

The payroll jobs report lists 35,300 new jobs in retail trade. How is this possible when J.C. Penny’s, Macy’s, Sears, and the dollar store chains are in trouble and closing stores, and shopping centers are renting space by the day or hour?

At a time when there is a surfeit of office buildings and only 500 new jobs in “heavy and civil engineering construction,” the jobs report says 6,000 new jobs have been created in “architectural and engineering services.” What work are these architects and engineers doing?

The 4,900 computer systems jobs, if they exist, are likely short-term contracts from 6 to 18 months. Those who have the jobs are not employees but “independent contractors.”

The payroll jobs report gives an unusually high number–81,000–of “professional and business services” jobs of which 60,000 are “administrative and waste services,” primarily “temporary help services.”
“Health care and social assistance” accounts for 22,700 of the new jobs, of which 63 percent consist of “ambulatory health care services.”

“Performing arts and spectator sports” gave the economy 7,200 jobs, and 20,400 Americans found employment as waitresses and bartenders.

State governments hired 22,000 people.

Let’s overlook the contribution of the discredited “birth-death model” which overstates on average the monthly payroll jobs by at least 50,000, and let’s ignore the manipulation of seasonal adjustments. Instead, let’s assume the numbers are real. What kind of economy are we looking at?

We are looking at the workforce of a third world country with the vast bulk of the jobs in low-pay domestic service jobs. People working these part-time and independent contractor jobs cannot form a household or obtain a mortgage.

As John Titus, Dave Kranzler and I have shown, these jobs are filled by those aged 55 and over who take the low paying jobs in order to supplement meager retirement incomes. The baby boomers are the only part of the US labor force whose participation rate is rising. Of the claimed new jobs in September, 230,000 or 93 percent were jobs filled by those 55 and older. Employment of Americans of prime working age (25-54) declined by10,000 jobs in September from the August level.

As the US labor force continues its transition from first world to third world, real median family income will continue to decline. Ladders of upward mobility will continue to be dismantled, and income and wealth will continue to concentrate in the pockets of the One Percent. America is truly a country run for the few.

No Economy For Americans

Paul Craig Roberts

The Dow Jones stock average closed Friday at 17,137, despite the fact that the payroll jobs report was a measly 125,000 new jobs for August, an insufficient amount to keep up with the growth in the working age population.

The low 125,000 jobs figure is also inconsistent with the Bureau of Economic Analysis’ second estimate of second quarter 2014 US GDP growth of 4.2 percent–a figure beyond the capability of the present-day US economy.

Clearly, the economic numbers are out of sync with one another. They are also out of sync with reality.

One of the reasons the stock market average is high is the massive liquidity the Federal Reserve has pumped into the banking system since 2008. Instead of going into consumer inflation, the money went into stock and bond price inflation.

Another reason for the artificial high stock market is the multi-trillion dollar buy-back of their own stock by US corporations. Many of these corporations have even borrowed from the banks in order to drive up their share prices with heavy purchases, thus maximizing executive bonuses and the values of stock options for board members. In effect, they are looting their own firms by loading the companies with debt in order to drive up executive and board incomes.
The stock market’s rise is not because consumer incomes and real retail sales are growing. Real family median incomes have been falling, and real retail sales, at best, are flat.

Let’s look at the composition of the pathetic 125,000 new jobs, and then we will examine whether these jobs are real or make-believe. (Keep in mind that payroll jobs include part-time jobs and that the number of payroll jobs is not the number of people employed, because many Americans make ends meet by working two and even three jobs.)

As I have reported for many years, the US economy no longer is capable of creating goods producing jobs. The Bureau of Labor Statistics August payroll jobs report shows zero manufacturing jobs. I read the other day that the US now has four or five times more people on food stamps than in manufacturing jobs.
The jobs of the New Economy are in lowly paid, nontradable domestic services–the jobs that characterize a Third World Economy.

Perhaps reflecting the collapse of retail sales, retail trade lost 8,400 jobs in August.

“Professional and business services” accounted for 47,000 or 38% of August’s new jobs. Of these 47,000 new jobs, 49% consisted of “administrative and waste services,” largely temporary help services.

“Health care and social assistance” accounted for 42,700 or 34% of the new jobs of which 53% consists of “ambulatory health care services.”
Waitresses and bartenders accounted for 21,100 or 17% of the new jobs.

There were 8,000 new government jobs or 6% of the 125,000 new jobs.

That’s it. That is the job picture of “the world’s only superpower,” “the world’s largest economy,” “the world’s richest people.” It is the picture of employment in a Third World country.

And now for the real question: Are those 125,000 new jobs really there, or are they a statistical mirage? Statistician John Williams (shadowstats.com) says the jobs are a mirage produced by “the changing seasonal adjustments within the concurrent-seasonal adjustment process used by the Bureau of Labor Statistics” and by the birth/death model, which assumes that many more unreported new jobs are created each month by new start-up businesses than are lost from unreported business closings. Williams says that without the gimmicks used by BLS to create jobs that are not there, the actual change in August payrolls “was a solid contraction in excess of 125,000 jobs.” In other words, the economy did not gain 125,000 jobs. It lost 125,000 jobs.

Beginning with the Clinton regime, the American economy has only worked for the One Percent, and it only works for them because the government makes the 99 percent bail out the One Percent. The American economy is an Aristocratic Economy that works for the government-privileged few, but not for anyone else. To understand this hard fact, read Nomi Prins book, All The Presidents’ Bankers.

Of course, the real figures are more like the Ten Percent and the 90 percent. The One Percent caught on, because the upper reaches of that one percent are all multi-billionaires with more money than a family could spend in multiple lifetimes.

The time has passed when American corporations had a sense of social responsibility. Two distinguished Americans writing in Daedalus, one of the few remaining publications not (yet) under corporate control, show that US corporations have become socially dysfunctional because they only serve shareholders and executives.

Historically in the US, corporations had responsibilities to their customers, employees, communities, and owners. In recent years this has been changed. Today corporations only have responsibilities to their shareholders. If profits go up, executives receive performance bonuses for serving shareholders.

Reducing executive success to one indicator has has enormous negative consequences for everyone else. Americans are suffering in many ways. Their jobs, both manufacturing and professional tradable services such as software engineering, have been moved offshore and given to foreigners. Americans have been deprived of interest income so that the former bank officials in charge of the US government can save the banks that deregulation permitted to over leverage with debt and risk.

The costs of customer service has been shifted to customers who lose large amounts of time waiting to connect with a live person who can correct the mistake the company has made. The unleashing of greed as the only business virtue and pressure from Wall Street for greater profits has caused many service providers, such as telephone and Internet, to forego maintenance and upgrade of facilities in order to hold down costs and boost profits. My telephone ceased to work on September 3, and my service provider lacks sufficient work crews to repair my line prior to the evening of September 8. Last year my Internet provider could not reestablish my Internet service for 10 days. If you call about a bill or a service problem, the companies keep you on the line forever awaiting a real person while they try to sell you new services even though the ones you have purchased don’t work.

Sufficient service crews to provide satisfaction for customers means higher costs, less profits, less shareholder earnings and less performance bonuses for managers. Guess who pays the price for the large rewards to owners and managers–the customers.

I remember the days of AT&T, a regulated monopoly. Everything worked. Any problem was fixed within two hours, barring a major catastrophe such as a hurricane or tornado. The telephone was answered no later than the third ring by a real person, not a voice recording, and the person who answered could fix any problem. There was no menu of a half dozen or dozen from which to select and to wait another quarter hour while being given sales pitches.

Profits made by imposing costs on customers are not legitimate profits. Profits made by
relocating American jobs offshore are not legitimate profits. Profits achieved by bailouts of managerial mistakes by taxpayers who provide the bailout funds but don’t share in the bonuses are not legitimate profits.
Profits achieved by monopoly concentration, as now exists in the financial “services” industry, are not legitimate profits.

In America, franchises, chains, and big-box stores have destroyed a wide array of independent and family businesses that allowed enterprising Americans an independent existence.

Deregulated free-market America has created an economy that serves only the few, which explains the extraordinary concentration in the 21st century of income and wealth in fewer and fewer hands–another defining characteristic of a Third World country.

American capitalism has failed. It can no longer produce jobs for the work force, and its
profits come from its political ability to impose costs on the American population.

Defining Away Economic Failure

August 4, 2014 

Redefinition Is America’s Most Powerful Factor of Production

Paul Craig Roberts

Last week’s government guesstimate that second quarter 2014 real GDP growth will be 4% seems nonsensical on its face. There is no evidence of increases in real median family incomes or real consumer credit that would lift the economy from a first quarter decline to 4% growth in the second quarter. Middle class store closings (Sears, Macy’s, J.C. Penney) have spread into the Dollar stores used by those with lower incomes. Family Dollar, a chain in the process of closing hundreds of stores is being bought by Dollar Tree, the only one of the three Dollar store chains that is not in trouble. Wal-Mart’s sales have declined for the past 5 quarters. Declining sales and retail store closings indicate shrinking consumer purchasing power. Retail facts do not support the claim of a 4% GDP growth rate for the second quarter, and they do not support last Friday’s payroll job claim of 26,700 new retail jobs in July.

What about the housing market? Don’t the headlines accompanying last Friday’s payroll jobs report, such as “Hiring Settles Into Steady Gains,” mean more people working and a boost to the economy from a housing recovery? No. What the financial press did not report is that the US is in a structural jobs depression. In the 12-month period from July 2013 through July 2014, 2.3 million Americans of working age were added to the population. Of these 2.3 million only 330 thousand entered the labor force. My interpretation of this is that the job market is so poor that only 14% of the increase in the working age population entered the labor force.

The decline in the labor force participation rate is bad news for the housing market. The US labor force participation rate peaked at 67.3% in 2000 and has been in a sustained downturn ever since. The rate of decline increased in October 2008 with the bank bailout and Quantitative Easing. From October 2008 to the present, 13.2 million Americans were added to the working age population, but only 818 thousand, or 6%, entered the labor force.  Despite government and financial press claims, the Federal Reserve’s multi-year policy of printing money with which to purchase bonds did not restore the housing or job markets.

What about the stock market? It has been down in recent days but is still high historically. Isn’t the stock market evidence of a good economy? Not if stocks are up because corporations are buying back their own stock. Corporations are now the largest buyers of stocks. Recently we learned that from 2006 through 2013 corporations authorized $4.14 trillion in buybacks of their publicly traded stocks. Moreover, it appears that corporations have been borrowing the money from banks with which to buy back their stocks. Last year there were $754.8 billion in authorized stock buybacks and $782.5 billion in corporate borrowing. In the first three months of this year, companies purchased $160 billion of their own stocks.

Borrowing to buyback stock leaves a company with debt but without new investment with which to produce revenues to service the debt. The massive stock buybacks demonstrate that American capitalism is now corrupt. In order to maximize personal short-term financial benefits flowing from bonuses, stock options, and capital gains, CEOs, boards of directors, and shareholders are decapitalizing public companies and loading them up with debt.

Well, isn’t the economy being helped by the return of manufacturing to America? Apparently not. Data for 1999-2012 indicate that the offshoring of manufacturing increased by 9%.

One economist, Susan Hester, an economist for the Retail Industry Leaders Association, has decided to turn the loss of manufacturing jobs into a virtue. Her argument is that retail employment dwarfs manufacturing employment and that more American jobs can be created by selling more imports than by encouraging manufacturing in order to provide exports.

According to Ms. Hester’s research, the US makes more money from the retail side than from the production side. She concludes that the value added to a product by offshore labor is a small percentage of the value added by “managing offshored production, handling Customs clearances, managing warehouses and distribution, marketing apparel products, and by millions of people in the retail sector stocking shelves and working cash registers.”

In other words, the US manufacturing jobs moved offshore are just a throwaway. The money is made in selling the imports.

Ms. Hester neglects to recognize that when offshored production is brought to the US to be marketed, it comes in as imports and results in a larger US trade deficit. Foreigners use dollars paid to them for the products that they make for US firms to purchase ownership of US bonds, stocks, and real assets such as land, buildings, and companies. Consequently, interest, profits, capital gains, and rents associated with the foreign purchases of US assets now flow to foreigners and not to Americans. The current account worsens.

It works like this: The excess of US imports over US exports leaves foreigners with claims on US income and wealth that are settled by foreign purchases of US assets. The income produced by these assets now flows abroad with the consequence that income earned by foreigners on their US investments exceeds the income earned by the US on its foreign investments.

According to Ms. Hester’s reasoning, Americans would be better off it they produced nothing that they need and in place of manufacturing relied on the incomes of US fashion designers and pattern makers who specify the offshored production for US markets, on the compliance officers and freight agents, on production planning and expediting clerks, and on longshore workers and railroad employees who deliver the foreign-made goods to US consumer markets.

Ms. Hester believes that the value-added by offshored manufacturing is inconsequential. How then did China get rich from it, becoming the second largest economy and employing 100 million people in manufacturing (compared to America’s 12 million), and acquire the largest foreign reserves of any country?

After Ms. Hester answers that question she can explain why US corporations go to the trouble to offshore their manufacturing if the contribution to value-added is so low? The value added is obviously substantial enough for the labor cost savings to pay for transportation costs to the US from Asia, for the cost of set-up and management of foreign based facilities, and for the cost of the adverse publicity from abandoning US communities for Asia and still leave value-added after all costs to enlarge profits and drive up stock prices and executive bonuses.

Ms. Hester fools herself. The low value that she calculates Chinese, Indian, or Vietnamese labor adds to the price of a shirt reflects the low foreign labor cost, not a low value of the shirt in US markets or a low value of an iPhone in European markets. Marketing, warehousing and distribution are done in the US by more highly paid people, and this is why it looks like the value added comes from sources other than manufacturing. Ms. Hester overlooks that the lower cost of foreign labor does not translate into a less valued product but into higher profits.

Economists assume that the labor cost savings are passed on to the consumers in lower prices, but I have not experienced declining prices of Nike and Merrell sports shoes, of sheets and towels, of Brooks Brothers and Ralph Lauren shirts, of Apple computers, or whatever as a result of moving US production offshore. The labor cost savings go into profits, managerial bonuses, and capital gains for shareholders and is one reason for the extraordinary increase in income and wealth inequality in the US.

Focused on short-term profit, manufacturers and retailers are destroying the US consumer market. The average annual salary of a US apparel manufacturing worker is $35,000. The average salary of US retail employees is less than half of that amount and provides no discretionary income with which to boost consumer spending in retail stores.

The American corporate practice of offshoring manufacturing has made it impossible for the Obama regime to keep its promises of creating manufacturing jobs and exports. Unable to create real jobs and real exports, the US government has proposed to create virtual jobs and virtual exports made by “factoryless goods producers.” In order to keep his promise of doubling the growth of US exports, the Obama regime wants to redefine foreign output as US output.

A “factoryless goods producer” is a newly invented statistical category. It is a company like Nike or Apple that outsources the production of its products to foreign companies. The Obama regime is proposing to redefine companies such as Apple that own a brand name or a product design as manufacturing companies even though the companies do not manufacture.

In other words, whether or not a US company is a manufacturer does not depend on its activity, but on its ownership of a brand name made for the company by a foreign manufacturer. For example, Apple iPhones made in China and sold in Europe would be reported as US exports of manufactured goods, and iPhones sold in the US would no longer be classified as imports but as US manufacturing output. Apple’s non-manufacturing employees would be transformed into manufacturing employment.

Clearly, the purpose of this statistical deception is to inflate the number of US manufacturing jobs, US manufacturing output, and US exports and to convert imports into domestic production. It is a scheme that eliminates the large US trade deficit by redefinition.

The reclassification would leave the government’s Office of Statistical Lies with the anomaly that products made in China, India, Indonesia or wherever become US GDP as long as the brand name is owned by a US corporation, but the payments to the Asian workers who produced the products remain as claims on US wealth and can be converted into ownership of US bonds, companies, and real estate.

For example, Chinese workers produced the Apple products, and China has the claims on US wealth to prove it. How are these claims accounted for statistically by the Obama regime’s redefinition? The US can add China’s production of the Apple products to US GDP, but how does the US deduct the Chinese-produced Apple products from China’s GDP? And how does the Obama regime’s redefinition get rid of the payments by Apple to the Chinese labor that produced the products? These payments comprise claims on US wealth.

In other words, the reclassification would double count the output of Apple’s products. If every country does this, world GDP will rise statistically regardless of the fact that no more goods and services are produced. Perhaps this is the way to define away world poverty.

“Factoryless goods producers” was foreshadowed by Harvard professor Michael Porter’s 2006 competitiveness report, a justification for jobs offshoring. Defending jobs offshoring, Porter downplayed the rise in the US trade deficit and decline in the US GDP growth rate caused by jobs offshoring. Porter argued, in effect, that ownership of the revenues and products, not the location in which the revenues and products are produced, should determine their classification. As I pointed out in my critique (see The Failure of Laissez Faire Capitalism and Economic Dissolution of the West), the result would be to raise US GDP by the amount of US production outsourced abroad and by the output of US overseas subsidiaries and to decrease the GDP of the countries in which the manufacturing actually takes place. Consistency would require that the German and Japanese autos, for example, that are produced in the US with US labor would become deductions from US GDP and be reported as German and Japanese GDP.

As I have emphasized for years, the West already lives in the dystopia forecast by George Orwell.

Jobs are created by hypothetical add-ons to the reported payroll figures and by inappropriate use of seasonal adjustments. Inflation is erased by substituting lower priced items in the inflation index for those that rise in price and by redefining rising prices as quality improvements. Real GDP growth is magicked into existence by deflating nominal GDP with the understated measure of inflation. Now corporations without factories are going to produce US manufacturing output, US exports, and US manufacturing jobs!

Every sphere of Western existence is defined by propaganda. Consequently, we have reached a perfect state of nihilism. We can believe nothing that we are told by government, corporations, and the presstitute media.

We live in a lie, and the lie is ever expanding.

Virtual Economy’s Phantom Job Gains Are Based on Statistical Fraud

And More Fraud Is in the Works
July 7, 2014 |
Paul Craig Roberts

Washington can’t stop lying. Don’t be convinced by last Thursday’s job report that it is your fault if you don’t have a job. Those 288,000 jobs and 6.1% unemployment rate are more fiction than reality.

In his analysis of the June Labor Data from the Bureau of Labor Statistics, John Williams (www.ShadowStats.com) wrote that the 288,000 June jobs and 6.1% unemployment rate are “far removed from common experience and underlying reality.” Payrolls were overstated by “massive, hidden shifts in seasonal adjustments,” and the Birth-Death model added the usual phantom jobs.

Williams reports that “the seasonal factors are changed each and every month as part of the concurrent seasonal-adjustment process, which is tantamount to a fraud,” as the changes in the seasonal factors can inflate the jobs number. While the headline numbers always are on a new basis, the prior reporting is not revised so as to be consistent.

The monthly unemployment rates are not comparable, so one doesn’t know whether the official U.3 rate (the headline rate that the financial press reports) went up or down. Moreover, the rate does not count discouraged workers who, unable to find a job, cease looking. To be counted among the U.3 unemployed, the person must have actively looked for work during the four weeks prior to the survey.  

The U.3 rate(the headline rate that the financial press reports)  automatically declines as people who have been unable to find jobs cease trying to find one and thereby cease to be counted as unemployed.

There is a second official measure of unemployment that includes people who have been discouraged for less than one year. That rate, known as U.6, is seldom reported and is double the 6.1% rate.
Since 1994 there has been no official measure than includes discouraged people who have not looked for a job for more than a year.  

Including all discouraged workers produces an unemployment rate that currently stands at 23.1%, almost four times the rate that the financial press reports.

What you can take away from this is the opposite of what the presstitute media would have you believe. The measured rate of unemployment can decline simply because large numbers of the unemployed become discouraged workers, cease looking for work, and cease to be counted in the U.3 and U.6 measures of the unemployment rate.

The decline in the employment-population ratio from 63% prior to the 2008 downturn to 59% today reflects the growth in discouraged workers. Indeed, the ratio has not recovered its previous level during the alleged recovery, an indication that the recovery is an illusion created by the understated measure of inflation that is used to deflate nominal GDP growth.

Another indication that there has been no recovery is that Sentier Research’s index of real median household income continued to decline for two years after the alleged recovery began in June 2009. There has been a slight upturn in real median household income since June 2011, but income remains far below the pre-recession level.

The Birth-Death model adds an average of 62,000 jobs to the reported payroll jobs numbers each month. This arbitrary boost to the payroll jobs numbers is in addition to the Bureau of Labor Statistics’ underlying assumption that unreported jobs lost to business failures are matched by unreported new jobs from new business startups, an assumption that does not well fit an economy that fell into recession and is unable to recover.

John Williams concludes that in current BLS reporting, “the aggregate average overstatement of employment change easily exceeds 200,000 jobs per month.”

In other words, the economy did not gain 288,000 new jobs last month. But let’s assume the economy did gain 288,000 jobs and exam where the claimed jobs are reported to be.

Of the alleged 288,000 new jobs, 16,000, or 5.5 percent are in manufacturing, which is not very promising for engineers and blue collar workers. Growth in goods producing jobs has almost disappeared from the US economy. As explained below, to alter this problem the government is going to change definitions in order to artificially inflate manufacturing jobs.

In June private services account for 82 percent of the supposed new jobs. The jobs are found mainly in non-tradable domestic services that pay little and cannot be exported to help to close the large US trade deficit.

Wholesale and retail trade account for 55,300 jobs. Do you believe sales are this strong when retailers are closing stores and when shopping malls are closing?

Insurance contributed 8,500 jobs.

As so few can purchase homes, “real estate rental and leasing” contributed 8,500 jobs.

Professional and business services contributed 67,000 jobs, but 57% of these jobs were in employment services, temporary help services, and services to buildings and dwellings.
That old standby, education and health services, accounted for 33,700 jobs consisting mainly of ambulatory health care services jobs and social assistance jobs of which three-quarters are in child day care services.

The other old standby, waitresses and bartenders, gave us 32,800 jobs, and amusements, gambling, and recreation gave us 3,500 jobs.

Local government, principally education, gave us 22,000 jobs.

So, where are the jobs for university graduates? They are practically non-existent. Think of all the MBAs, but June had only 2,300 jobs for management of companies and enterprises.

Think of the struggle to get into law and medical schools. There’s no job payoff. June had jobs for 1,200 in legal services, which includes receptionists and para-legals. Where are all the law school graduates finding jobs?

Offices of physicians  hired 4,000 people. Outpatient care centers hired 700 people. Nursing care facilities hired 2,400 people. So where are the jobs for the medical school graduates?

Aside from all the exaggerations in the jobs numbers of which ShadowStats.com has informed us, just taking the jobs as reported, what kind of economy do these jobs indicate: a superpower whose pretensions are to exercise hegemony over the world or an economy in which opportunities are disappearing and incomes are falling?

Do you think that this jobs picture would be the same if the government in Washington cared about you instead of the mega-rich?

Some interesting numbers can be calculated from table A.9 in the BLS press release. John Williams advises that the BLS is inconsistent in the methods it uses to tabulate the data in table A.9 and that the data is also afflicted by seasonal adjustment problems. However, as the unemployment rate and payroll jobs are reported regardless of their problems, we can also report the BLS finding that in June 523,000 full-time jobs disappeared and 800,000 part time jobs appeared.

Employers are terminating full-time employment and replacing the jobs with part-time employment in order to come in under the 50-person full time employment that makes employers responsible for fringe benefits such as health care.

Americans are already experiencing difficulties making ends meet, despite the alleged “recovery.” If yet another half million Americans have been forced onto part-time pay with consequent loss of health care and other benefits, consumer demand is further compressed, with the consequence, unless hidden by statistical trickery, of a 2nd quarter negative GDP and thus officially the reappearance of recession.

What will the government do if a recession cannot be hidden? If years of unprecedented money printing and Keynesian fiscal deficits have not brought recovery, what will bring recovery? How far down will US living standards fall for the 99% in order that the 1% can become ever more mega-rich while Washington wastes our diminishing substance exercising hegemony over the world?

Just as Washington lied to you about Saddam Hussein’s weapons of mass destruction, Assad’s use of chemical weapons, Russian invasion of Ukraine, Waco, and any number of false flag or nonexistent attacks such as Tonkin Gulf, Washington lies to you about jobs and economic recovery. Don’t believe the spin that you are unemployed because you are shiftless and prefer government handouts to work. The government does not want you to know that you are unemployed because the corporations offshored American jobs to foreigners and because economic policy only serves the oversized banks and the one percent.

The federal governments Economic Classification Policy Committee has come up with a proposal to redefine fact as fantasy in order to hide offshoring’s contribution to the US trade deficit, artificially inflate the number of US manufacturing jobs, and redefine foreign-made manufactured products as US manufactured products. For example, Apple iPhones made in China and sold in Europe would be reported as a US export of manufactured goods. Read Ben Beachy’s important report on this blatant statistical fraud in CounterPunch’s July 4th weekend edition.

China will not agree that the Apple brand name means that the phones are not Chinese production. If  Obama succeeds with this fraud, the iPhones would be counted twice, once by China and once by the US, and the double-counting would exaggerate world GDP.

For years I have exposed the absurd claim that offshoring is merely the operation of free trade, and I have exposed the incompetent studies by such as Michael Porter at Harvard and Matthew Slaughter at Dartmouth that claimed to prove that the US was benefitting from offshoring its manufacturing. My book published in 2012 in Germany and in 2013 in the US, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West, proves that offshoring has dismantled the ladders of upward mobility that made the US an opportunity society and is responsible for the decline in US economic growth. The lost jobs and decline in the middle class has contributed to the rise in income inequality, the destruction of tax base for cities and states, and loss of population in America’s once great manufacturing centers.

For the most part economists have turned a blind eye. Economists serve the globalists. It pays them well.

The corruption in present-day America is total. Psychologists and anthropologists serve war and torture. Economists serve globalism and US financial hegemony. Physicists and chemists serve the war industries. Physicists and computer geeks serve NSA. The media serves the government and the corporations. The political parties serve the six powerful private interest groups that rule the country.

No one serves truth and liberty. 

More Phantom Jobs Created–All In The Wrong Places

June 6, 2014
More Phantom Jobs Created–All In The Wrong Places
education is not the answer
Paul Craig Roberts

Last April I saw a report that 83% of May’s college graduates did not have a job. I remarked that in my day most of us had 2 or 3 job or graduate school offers before we graduated. The latest payroll jobs report issued on June 6 proves that the April report was true.

My opinion, schooled in part by John Williams’ very precise reports on Shadowstats.com, is that on average about half of the new jobs each month are phantom jobs created by the birth-death model and inappropriate seasonal adjustments. So, I figured that the 217,000 jobs claimed for May are more like 108,000. Then I read John Williams’ report on the May jobs number: “Monthly payroll gains overstated by 200,000 plus jobs”

In other words, there were zero new jobs in May.

Just as the US government can turn an inconsequential Iraq, Afghanistan, Libya, and Syria into dangerous threats against “the world’s only superpower,” the US government can turn zero jobs growth into 217,000 jobs. It is easy when you have a prostitute media and a gullible public, both of which Washington most certainly has.

But let’s take the government data at face value.

First, consider the news report that finally as of May 2014 as many Americans had jobs
as had jobs in January 2008. That might seem like good news until you take into account that since January 2008 the US has experienced 6.5 years of population growth. Economists seem to have settled on population growth adding 129,000 people to the work force each month. That comes to 10,000,000 people. Where are their jobs? The “jobs recovery” doesn’t provide for the 10 millions who have come of working age since January 2008.

We can conclude from this that the official 6.3 percent unemployment rate is nonsense. The unemployment rate is in the neighborhood of 23 percent as John Williams has established.

Just as the US government claims, falsely, that Russia invaded Ukraine and annexed Crimea, that Saddam Hussein had weapons of mass destruction, that Assad used chemical weapons on Syrians, and so forth and so on, the 6.3 percent unemployment rate is just another government lie.

Second, consider where the claimed 217,000 May jobs are. Hardly any of these claimed jobs are jobs in which university graduates begin their careers. The jobs are in wholesale trade, retail clerks, transportation and warehousing, employment services and temporary help, waitresses and bartenders, and health care and social assistance. In the later category, ambulatory health care services and social assistance account for the majority of jobs.

If college graduates have jobs, they are not the jobs for which they studied. On March 31, CNN Money reported that 260,000 college graduates were employed at or below the federal minimum wage of $7.25 per hour.

For the many years that I have been reporting on the jobs statistics, there has been scant sign of any jobs for college graduates. Considering that there are at least 3,100 colleges and universities in the US, the May graduating class must number in the hundreds of thousands. Looking at the May jobs statistics, those graduating from law school face a dismal situation as employment of lawyers dropped by 700. There were jobs for only 4,100 accountants and bookkeepers. There were 4,500 jobs for architects and engineers, a number that includes secretaries and office managers. There were 1,800 management jobs. State government education jobs declined by 5,300 and local government education jobs declined by 6,600 jobs. So where did the education majors find employment?

How is the second quarter going to come roaring back, as the financial media assures us it will, when the jobs report is so discouraging? How much longer will Washington be able to hide the fact that the US economy is sinking?

If you read all the bullshit that the American media and educational establishment puts out, “education is the answer.” Apparently not. Education is the way to become deeply in debt and work for $7.25 per hour, if you are lucky to escape unemployment.

America is a Great Big Lie. There is no truth in what we are told. The entire country, along with that part of the world under Washington’s thumb, is run for about six private interest groups. The rest of us are being fleeced.

Why Did the Unemployment Rate Drop So Much?

by Phil Izzo, Wall Street Journal

The U.S. unemployment rate tumbled to 6.3% in April as the overall labor force posted its biggest decline since October. The question for the health of the labor market: Why did all those people drop out?

The jobless rate is calculated by taking the total number of unemployed people and dividing it by everyone in the U.S. who is working or looking for work — what the Labor Department calls the labor force. When both of those numbers decline, even if fewer people got jobs in the month, the unemployment rate falls. Both of those numbers can fall for many reasons, and they’re worrisome to different degrees.

The one that raises the biggest concern is when unemployed people get discouraged with the job market and give up looking for work. Once someone leaves the labor force, it’s much harder for them to eventually find work. Many never return. That was at least part of the reason for the decline in April. The number of workers who said they weren’t looking for work because they were discouraged over job prospects ticked higher. But the number remained below the average for all of last year, and doesn’t come close to accounting for the big drop in the labor force. Meanwhile, the total number of people who moved from unemployed out of the labor force also ticked up last month, but it was very close to the average for 2013, indicating no acceleration.

Another way to look to see if people are giving up is by looking at a broader measure of unemployment, known as the “U-6″ for its data classification by the Labor Department. That rate includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find. The rate was 12.3% in April, falling the same 0.4 percentage point that the headline rate declined. When the U-6 is steady and the main rate is falling, it can suggest an underlying weak labor market. But when both are dropping together, it suggests that there might be other broader trends.

So if the labor force didn’t drop this month because of people giving up, what’s going on? One trend weighing on the labor force is people with jobs retiring, and last month there was an increase in the number of employed people who were no longer working or looking for work. That flow was at its highest level since October and the third highest since before the recession.

But that doesn’t explain why there are fewer unemployed people. The number of unemployed can fall because people got jobs, because they dropped out of the labor force, or it can fall just because fewer people decided to start looking for work. In April, one of the reasons the number of unemployed fell is because fewer people came off the sidelines to look for work. The number of people flowing from out of the labor force to unemployed was at its lowest level since 2008. Lots more people than usual decided to stay on the sidelines.

That isn’t a hopeful sign for the economy, as people who otherwise might want work aren’t encouraged enough to come off the sidelines. But it’s also less worrying than people giving up looking for work. Many new entrants to the labor force are younger people who will eventually come in, and are on the sidelines because they can be.

No one should read too much into one month’s moves in the labor force. Much of this month’s changes could be recalibrating after a couple of months of increases in the labor force participation rate, and some of it could be reversed next month. Meanwhile, while the details suggest the trend is worth watching, it’s not likely that this month represents a return to discouraged workers giving up and dropping out of the labor market.

Our irrational, harmful bias against the unemployed

By Peter Cappelli, Washingon Post

The persistent high level of unemployment in the six years since the Great Recession began is fast becoming the defining theme of this generation — and a leadership imperative that can no longer be ignored.

Friday’s news on job growth is good: an increase of 288,000 jobs this past month, bringing the unemployment rate to 6.3 percent, well down from its 30-year peak of 10 percent. The number of discouraged workers who want a job but have given up trying to find one is unchanged, however. When we include those in the mix, we’re still left with about three available candidates for every job vacancy out there.

The three and a half million people who remain “long-term unemployed” — that is, who have been out of work for more than six months — represent more than a third of unemployed workers. This is the highest it’s been since the Great Depression. Being out of work that long creates many problems, such as a loss of housing or health care, that not only cause hardship for individuals and their families, but also place even more burdens on public and private support systems.

Yet the tools for addressing the long-term unemployment problem are within our grasp. And chief among them is for employers to move past the stigma that the unemployed are somehow less qualified to hold a job. That bias persists in corporate human resources departments, but it is unsupported by evidence.

It’s maddening to see such imaginary fears become real barriers to solving our employment crisis. A field study by Northeastern University economics Ph.D. candidate Rand Ghayad and another led by Kory Kroft at University of Toronto sent out fake resumes to employers. The studies found strong evidence that employers’ willingness to consider applicants dropped like a stone after the candidates had been unemployed for six months. The companies actually preferred candidates with no relevant experience to those with a background in the field but who’d been out of work for a stretch.

Corporate leaders haven’t always viewed unemployment this way. Traditionally when the economy improved and created new jobs, businesses would look to the ranks of the unemployed to fill them. Until the mid-1980s, the term “layoff” actually referred to a temporary job loss — and employers were expected to rehire these workers as soon as the economy turned up again.

But by the 1990s, that stopped happening, and the term became a euphemism for permanent job losses instead. This coincided with the “jobless recoveries” that have accompanied every recession since then.

So if employers are not rehiring from the ranks of the unemployed now, how do they fill new jobs? By hiring from each other. This nonsensical game of musical chairs (I hire your workers, you hire someone else’s, and then they try to hire mine) would seem to be unsustainable. Sooner or later, one might think, employers will start to see the unemployed as a valuable alternative.

But in fact, they haven’t. Vacancies are simply staying open longer as employers wait to find individuals who are willing to move from other companies. And it has become so prevalent for employers to reject unemployed job candidates outright that last year the Equal Employment Opportunities Commission threatened to start investigating these cases.

Why won’t employers take long-term unemployed candidates more seriously? The reason has much to do with simple bias, and little to do with hard evidence.

One myth about the unemployed is that something must be wrong with a person who lost his or her job. The economists Bob Gibbons and Larry Katz found evidence of this when they studied how people who were laid off because their plant closed — an event that clearly wasn’t their fault. They had an easier time getting rehired than those who were laid-off for other reasons.

Meanwhile, the most intense bias against the long-term unemployed seems to be the result of yet another myth: If they were good, someone else would have hired them by now. All it takes is for enough hiring managers to think this same way, and no one would ever get a job.

The final reason for bias against the long-term unemployed is the notion that their skills must have gotten out of date by not working. That might be true for surgeons, whose manual dexterity can decline quickly, or maybe in tech fields where software has advanced to a new generation.

But few jobs are like that. Studies have found that the performance of new hires who had been unemployed for a long time was no different than that of new hires who came directly from jobs elsewhere. In fact, most jobs are so routine that taking a break from them — a sabbatical — is actually a good thing for improving work performance. Ironically, so few employees learn new skills on the job these days that it's much more likely that an unemployed person might have expanded his or her skill set, either by taking classes, mastering new software or learning new marketing techniques in the course of extended unemployment.

Ruling out job candidates because they have been unemployed imposes big costs on both citizens, who remain without jobs and income, and on the economy — not to mention on employers who are losing out on an entire population of talented candidates. There is no justification for doing it. In fact, it’s a form of discrimination.

Responsible business leaders should, at the very minimum, tell their human resource departments to update their hiring policies so they don’t filter applicants based on current employment status. The biggest problem is likely to be overcoming the prejudices of hiring managers, who often have little information about the real predictors of job performance and so rely on these false assumptions that unemployed candidates probably aren't good performers. A simple statement from leadership that this is not the case is often enough to change their approach.

Moreover, corporate leaders should support policy changes that provide tax credits for hiring the long-term unemployed. The credits would incentivize employers to look past their own biases, and would cost the government nothing unless an eligible candidate is hired. I reviewed the research for a group called the National Employer Opportunities Network, and we found that such tax credits are a cheap and ultimately beneficial way to move people off government programs.

Plus, in the process, it may actually increase total employment — and help stop the pointless game of musical chairs that hurts rather than helps everyone.

An overview of the April 2014 jobs report

May 2, 2014


The Bureau of Labor Statistics reported on May 2, 2014 that the official seasonally adjusted unemployment rate for April 2014 was 6.3 percent, down from 6.7 percent in March and February, and from 7.5 percent in April 2013.

Total non-farm employment increased by 288,000 during the month of April with seasonal adjustment, but increased by 1,152,000 during the month of April without seasonal adjustment.

The seasonally adjusted total non-farm job creation figure for March 2014 was revised upward to 203,000 from 192,000, and the seasonally adjusted total non-farm job creation figure for February 2014 was revised upward to 222,000 from 197,000. The unadjusted total non-farm job creation figure for March 2014 was revised upward to 944,000 from 941,000, and the unadjusted total non-farm job creation figure for February 2014 was revised downward to 741,000 from 743,000.

Breaking these figures down further, with seasonal adjustment, private sector employment increased by 273,000 during the month of April while government employment increased by 15,000. Without seasonal adjustment, private sector employment increased by 1,109,000 during the month of April while government employment increased by 43,000.

The seasonally adjusted private sector job creation figure for March 2014 was revised upward to 202,000 from 192,000, and the seasonally adjusted private sector job creation figure for February 2014 was revised upward to 201,000 from 188,000. The unadjusted private sector job creation figure for March 2014 was revised upward to 834,000 from 831,000, and the unadjusted private sector job creation figure for February 2014 was revised downward to 307,000 from 315,000.

The seasonally adjusted government job creation figure for March 2014 was revised upward to 1,000 from 0, and the seasonally adjusted government job creation figure for February 2014 was revised upward to 21,000 from 9,000. The unadjusted government job creation figure for March 2014 was not revised from 110,000, and the unadjusted government job creation figure for February 2014 was revised upward to 434,000 from 428,000.

The BLS keeps track of six unemployment rates, which are defined as follows and given without seasonal adjustments:

• U1: Persons unemployed 15 weeks or longer, as a percent of the civilian labor force. This rate is 3.3 percent for April 2014, down from 3.7 percent for March, 3.6 percent for February, and 4.3 percent for April 2013.
• U2: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force. This rate is 3.2 percent for April 2014, down from 3.7 percent for March, 3.9 percent for February, and 3.9 percent for April 2013.
• U3: Total unemployed, as a percent of the civilian labor force (official unemployment rate). This rate is 5.9 percent for April 2014, down from 6.8 percent for March, 7.0 percent for February, and 7.1 percent for April 2013.
• U4: U3 plus discouraged workers, as a percent of the civilian labor force plus discouraged workers. “Discouraged workers” are those who have stopped looking for work because current economic conditions make them believe that no jobs are available. This rate is 6.3 percent for April 2014, down from 7.2 percent for March, 7.5 percent for February, and 7.6 percent for April 2013.
• U5: U4 plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force. “Marginally attached” workers are those who would like and are able to work, but have not looked for a job recently. This rate is 7.2 percent for April 2014, down from 8.1 percent for March, 8.4 percent for February, and 8.5 percent for April 2013.
• U6: U5 plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. This rate is 11.8 percent for April 2014, down from 12.8 percent for March, 13.1 percent for February, and 13.4 percent for April 2013.

As people who are employed part-time typically work about half as much as people who work full-time, it is useful to consider a "U5½," defined as the arithmetic mean of the U5 and U6 numbers. This measure would thus count people who work part-time but wish to work full-time as "half-employed." This rate is 9.5 percent for April 2014, down from 10.45 percent for March, 10.75 percent for February, and 10.95 percent for April 2013.

The BLS revised the Current Population Survey, which gathers the data needed to determine these rates, in 1994. Among the changes made, the U3 rate was named the new "official" unemployment rate, instead of the U5 rate. This revision also defined "long-term discouraged workers" out of official existence. With the inclusion of long-term discouraged workers, the SGS Alternate Unemployment Rate, which might be considered a "U7" rate, exceeds 23 percent.

The use of the U3 as the official definition exposes some holes in the BLS's thinking, because according to them, the following are true:

• A person who loses a full-time job but spends one hour each week mowing a lawn for pay is considered employed.
• A person who simply expresses interest in having a job is classified as unemployed.
• "Discouraged workers" are not classified as unemployed or even as part of the labor force.
• A sharp decrease in a worker's wages when forced to change jobs is not accounted for.

What this means is that the official unemployment rate can fluctuate because discouraged workers (who are not considered to be part of the labor force in the U3 measurement) who re-enter the labor force will cause the U3 rate to spike. The U3 rate can also dip temporarily when such people find temporary jobs and then lose them a month or two later. It also means that the U3 rate will go down when people give up looking for jobs, as 806,000 people did in April 2014. The labor force participation rate was 62.8 percent for April 2014, down from 63.2 percent for March, 63.0 percent for February, and 63.3 percent for April 2013.

Given the problems with the BLS unemployment rates, are they a useful measurement of how well the economy is performing, a wild guess that cannot be accurate despite the BLS's best efforts, or a deliberate fraud by the government? I report, you decide.

Discouraged Worker Dropouts Rise 783k, 80% Higher Than Nonfarm Payroll Jobs Added

Anthony B. Sanders – George Mason University

 

I was at Cornell University in Ithaca New York giving a presentation on mortgages on Friday when the jobs report was released, so I had to wait to read the report in its entirety. Here is my after-seminar report from Friday while waiting to go to dinner.

According to the Bureau of Labor Statistics, there are 9.75 million Americans that are “unemployed” and there are 92.02 million Americans that are “not in the labor force” for a grand total of 101.77 million working age Americans that do not have a job. Back in April 2000, only 5.48 million Americans were unemployed and only 69.27 million Americans were “not in the labor force” for a grand total of 74.75 million Americans without a job. That means that the number of working age Americans without a job has risen by 27 million since the year 2000.
 
However, the banner headline in the media was “288,000 Jobs Added!!” What was NOT in the headlines was that the number of people in the labor force fell by 806,000. In other words, 518,000 more workers LEFT the labor force than joined it in April.

In addition, the Number Of Workers Discouraged Not in Labor Force Searched For Work rose by 783,000 in April. That figure is back to the alleged “end” of the recession (according to the NBER). So, does this mean that the U.S. can announced that the Labor Market’s recession has ended?

No. The following economic indicators have declined since the end of 2008: real median household income, hourly wage growth (YoY), labor force participation rate, and M2 Money Velocity.

The Federal Reserve has attempted to depress interest rates with quantitative easing (balance sheet purchases and zero-interest rate policy), but the labor market is only back to end of recession levels.

According to the Taylor Rule, The Fed should be raising the Fed Funds Rate Target (should be 1.52%, but Fed Funds Target still at 0.25%). The point is for mortgage lenders is that the number of qualified borrowers have been reduced because of the recession and bubble burst and small increases in interest rates are unlikely to have an effect.

And lastly, of course, mortgage purchase applications remain lower than at the “end” of the recession in June 2009. Mortgage borrowers are as discouraged as unemployed workers.

Note: My colleague at University of South Carolina, Jean Helwege, wrote me and said “Maybe it is because of the run-up in the stock market and people can now stop looking for work.” Possibly, but BLS doesn’t ask those questions. What we do know if the mortgage purchase applications and originations remain depressed after the housing and credit bubble burst, and that is correlated with declining wages, real income and the number of discouraged workers.

Anecdotal evidence? I know two kids from Columbus OH whose grandfather gave them both large Trust Funds. They are in their 20s and one doesn’t work and the other dabbles in low paying jobs (part-time). But we don’t know how pervasive that is across the country.

Real jobless rate hits 12.4%, 800,000 leave labor force

Jerome R. Corsi , WND

 

NEW YORK – The Bureau of Labor Statistics announcement that unemployment has dropped from 6.7 percent in March to 6.3 percent in April was partly attributed to some 800,000 workers dropping out of the labor force last month, reducing the labor participation rate to 62.8 percent, a new low for the Obama administration.

After adjusting the BLS unemployment number to what is known as “U-6” – a measure that includes total unemployed, plus all persons marginally attached to the labor force, plus total part-time employed for economic reasons – unemployment in April was 12.3 percent.

The amount (not seasonally adjusted) of Americans not in the labor force in April rose to 92,594,000, almost 1 million more than the previous month. In March, 91,630,000 Americans were not in the labor force, which includes an aging population that is continuing to head into retirement.

According to John Williams, an economist known for arguing the government reports manipulate “shadow statistics” of economic data for political purposes, drops in the unemployment rate as reported by the BLS have become virtually meaningless.

“The broad economic outlook has not changed, despite the heavily-distorted numbers that continue to be published by the BLS,” Williams writes in his subscription newsletter on ShadowStats.com. “The unemployment rates have not dropped from peak levels due to a surge in hiring; instead, they generally have dropped because of discouraged workers being eliminated from headline labor-force accounting.”

Williams recreates a ShadowStats alternative unemployment rate reflecting methodology that includes “long-term discouraged workers.” In 1994 under the Clinton administration, the Bureau of Labor Statistics removed that category from those considered “unemployed” in any of the government’s unemployment measures.

The BLS publishes six levels of unemployment, but only the headline U3 unemployment rate gets the press. The headline number does not count as unemployed the “discouraged” workers who have not looked for work in the past four weeks because they believed no jobs were available.

Discouraged workers

Williams has demonstrated that it takes an expert to truly decipher BLS unemployment statistics.

The U6 unemployment rate is the BLS’s broadest measure. It includes those marginally attached to the labor force and the “under-employed” – those who have accepted part-time jobs though they are looking for full-time employment. Also included are short-term discouraged workers who have not looked for work in the last year because there are no jobs to be found.

Since 1994, however, the long-term discouraged workers, those who have been discouraged for more than one year, have been excluded from all government data.

Williams calculates his “ShadowStats Alternative Unemployment Rate” by adding to the BLS U6 numbers the long-term discouraged workers.

He argues that his ShadowStats Alternative Unemployment measure most closely mirrors common experience.

“If you were to survey everyone in the country as to whether they were employed or unemployed, without qualification as to when they last looked for a job, the resulting unemployment rate would be close to the ShadowStats estimate,” Williams told WND.

The headline BLS unemployment rate has stayed relatively low because it excludes all discouraged workers, Williams argues.

As the unemployed first become discouraged and then disappear into the long-term discouraged category, they also vanish from inclusion in the headline labor force numbers. Those workers, however, are ready to take a job if one becomes available. They are unemployed and consider themselves to be unemployed, but the government’s popularly followed unemployment reporting ignores them completely.

Below is a more complete unemployment table that includes the seasonally adjusted unemployment percentages for U3 unemployment as well as the same for U6 unemployment, followed by the ShadowStats Alternative Unemployment rate, comparing April 2013 for March and April 2014.

Economy of part-time jobs

In August 2013, the House Ways and Means Committee documented that seven out of every eight new employees under Obama have been part-time employees.

“The headlines citing last week’s jobs report as the lowest unemployment rate in years may have been technically accurate, but they are also reminders that looks can be deceiving,” the House Ways and Means report noted at the time.

“The reality, as you dig into the latest jobs data, reveals that few are finding the full-time work they want and need, and many are forced to accept part-time employment.”

To support the argument, the House Ways and Means Committee produced the following table drawn from Bureau of Labor Statistics.

The House Ways and Means Committee linked to an article Associated Press published Aug. 4, 2013, that stated: “So far this year, low-paying industries have provided 61 percent of he nation’s job growth, even though these industries represent just 39 percent of overall U.S. jobs, according to Labor Department numbers analyzed by Moody’s Analytics.”

AP economics writer Paul Wiseman noted part-time work had made up more than 77 percent of the job growth so far that year, with part-time work defined as being less than 25 hours a week.

Appearing on PBS’s “McLaughlin Group” in October 2013, real estate mogul Mort Zuckerman said that “88 percent of the jobs that have been created this year (2013) are part-time jobs.”

Jobs increase by 288,000 in April. Unemployment rate falls to 6.3%. But labor force falls sharply

by Meteor Blades for Daily Kos Labor

Calculated Risk

The Bureau of Labor Statistics reported the economy created a seasonally adjusted 273,000 new private jobs in April, and 15,000 new jobs in the public sector, the best overall gain since January 2012. The consensus of experts surveyed by Bloomberg earlier in the week had put expected new job creation at 215,000. Both full-time and part-time jobs are included in the total. The official unemployment rate fell to 6.3 percent, the lowest level since September 2008.

There were a couple of clouds over these significantly improved figures, however. The civilian labor force shed 806,000 people in April, a massive drop after rises in the three-month January-March period of 1.26 million. The employment-population ratio remained steady 58.9 percent. But the labor force participation rate fell to 62.8 percent, a 0.4 percent drop that returned it to its lowest level in 37 years.

The bureau's report always includes an alternative measure, U6. This calculation covers not just Americans with no job, but also those working part time who want full-time positions—the underemployed who are called "part time for economic reasons"—and workers who have looked for jobs in the past 12 months but not in the past four weeks. U6 fell from 12.7 percent in March to 12.3 percent in April. U6 does not include people who have not looked for work in the past 12 months.

Revisions changed the job numbers for February from 197,000 to 222,000 and for March from 192,000 to 203,000. That produced a three-month average of 238,000. At that rate, according to the Hamilton Project's Job Gap calculator, it would take until December 2017 to return to pre-recession employment levels at the same time as absorbing the people who enter the labor force each month.

The number of long-term unemployed who have been jobless for 27 weeks or more, fell to 3.5 million, 35.3 percent of all those accounted for who have no work.

The number of officially unemployed Americans fell sharply to 9.8 million. But there are the millions of discouraged workers not included in that count because they have left the workforce.

The payroll services company Automatic Data Processing had reported on Wednesday a seasonally adjusted gain of 220,000 private-sector jobs for April. ADP does not report on public-sector jobs and its estimated growth figures, despite a change in methodology in 2012, frequently aren't a close match with the BLS private-job figures.

Among other news in the April job report:

Demographic breakdown of official (U3) seasonally adjusted jobless rate:

• African American: 11.6 percent
• Latino: 7.3 percent
• Asian (not seasonally adjusted): 5.7 percent
• American Indian (data not collected on monthly basis)
• White: 5.3 percent
• Adult women (20 and older): 5.7 percent
• Adult Men (20 and older): 5.9 percent
• Teenagers (16-19): 19.1 percent

Duration of unemployment:

• Less than five weeks: 2.45 million
• 5 to 14 weeks: 2.35 million
• 15 to 26 weeks: 1.53 million
• 27 weeks and more:  3.45 million

Job gains and losses in selected categories:

• Professional services: + 75,000
• Transportation and warehousing : + 11,300
• Leisure & hospitality: + 28,000
• Information: - 3,000
• Health care: + 27,900
• Retail trade: + 34,500
• Construction: + 32,000
• Manufacturing: + 12,000
• Average weekly manufacturing hours fell 0.2 hours to 40.8 hours.
• Average work week for all employees on non-farm payrolls remained at 34.5 hours.
• Average hourly earnings for all employees on private nonfarm payrolls was unchanged at $24.31.

Here's what the seasonally adjusted job growth numbers have looked like in March for the previous 10 years.

April 2004: + 249,000
April 2005: + 363,000
April 2006: + 182,000
April 2007: +   78,000
April 2008: -  214,000
April 2009: -  684,000
April 2010: + 251,000
April 2011: + 322,000
April 2012: +   96,000
April 2013: + 203,000
April 2014: + 288,000

For some time now, the Economic Policy Institute has been keeping track of "missing workers." These people "who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted as unemployed if they are actively seeking work, these “missing workers” are not reflected in the unemployment rate."

EPI says there are currently 6.2 million of these missing workers. Here are two charts showing its findings:

The BLS jobs report is the product of a pair of surveys, one of more than 410,000 business establishments called Current Employment Statistics, and one called the Current Population Survey, which questions 60,000 householders each month. The establishment survey determines how many new jobs were added. It is always calculated on a seasonally adjusted basis determined by a frequently tweaked formula. The BLS report only provides a snapshot of what's happening at a single point in time.

It's important to understand that the jobs-created-last-month-numbers that it reports are not "real." Not because of a conspiracy, but because statisticians apply formulas to the raw data, estimate the number of jobs created by the "birth" and "death" of businesses, and use other filters to fine-tune the numbers. And, always good to remember, in the fine print, they tell us that the actual number of newly created jobs reported is actually plus or minus 100,000.

No Jobs, No Economy, No Prospects For Life

Paul Craig Roberts

Over the decades various administrations, seeking to improve their economic record, monkeyed with economic statistics to the point that the statistics are no longer meaningful.  

According to Friday's (March 7) payroll jobs report, the US economy created 175,000 new jobs in February.  If you believe that, I have a bridge in Brooklyn that I'll let you have at a good price. 

Even if 175,000 jobs were created in February--remember now, February was a cold month whose low temperatures are used to explain poor housing and retail sales performance, yet somehow created 40,000 more jobs than needed to keep up with population growth--that is an insufficient amount to drop the unemployment rate.

To see how screwed up US economic statistics are, consider the reported unemployment rate (U.3) of 6.7 percent in comparison with the fact that there are about 6 million Americans who have been unable to find a job and are no longer counted as unemployed. These millions of unemployed are not included in the reported rate of unemployment.

John Williams (shadowstats.com) reports that the true rate of US unemployment is around 23 percent.  

Rather than examine the issue, the presstitute financial media trumpets the government's propaganda. In America there is no more of a financial media, except for Pam Martens and Nomi Prins, than a print and TV media.

The Economic Policy Institute reports that there are 1,360,000 unemployed men and women under 25, 2,8000,000 unemployed men and women aged 25-54, and 1,640,000 unemployed men and women 55 and over who are not counted as unemployed, because they have been unable to find a job after searching a long time and have given up looking.

Just as "your" government and "your" prostitute media lie to you about Ukraine, Putin, Saddam Hussein, Gaddafi, Iran, Pakistan, Yemen, Palestine, NSA, spying, torture, 9/11, Obamacare, and literally everything under the sun, "your" government lies to you about the economy and hides from you the perilous state of your economic existence.  If you are not among the One Percent, you have no future in America.

Let us have a look at the 175,000 claimed jobs. Are these the promised high-paying jobs of the "New Economy" that Washington and its economists pimps guaranteed us would take the place of the offshored manufacturing and tradable professional service jobs?

Afraid not.  In the many years that I have been observing the monthly payroll jobs reports and the BLS's future jobs projections, I have never seen even one of the "New Economy" jobs.  They simply do not exist.  Yet, the economics profession, an extremely deluded collection of morons, still believes in these jobs.

Again--how many times have I reported this same result--here are the jobs of the "New Economy":   

Of the 175,000 jobs claimed, 13,000 are taxpayer-supported government jobs.

Of the 162,000 private sector jobs claimed, a mere 22,000 or 13.6% are goods producing jobs or which 15,000 or 68% are in construction  The other 140,000 are service jobs.

Are these service jobs the promised high-pay "New Economy" jobs?  No, but judge for yourself.  14,800 are jobs in wholesale trade. Food and beverage stores accounted for 12,000 new jobs. The Federal Reserve accounted for 7,800 jobs in order to continue rigging every financial market, thus replacing capitalism with Federal Reserve Central Planning.

Accounting and bookkeeping services (it is tax time) gave the economy a short-lived 15,700 jobs. There were 24,400 temporary help jobs. The old standby, education and health services, delivered 33,000 jobs. Leisure and hospitality produced 25,000 jobs of which 21,200 are waitresses and bartenders who live on tips.

This has been the jobs profile of the "world's only superpower" for the entirely of the 21st century. Washington, wallowing in its arrogance and hubris, is unconcerned with its economic base. Washington believes its own propaganda about the (non-existent) recovery and America's economic power.  

No Jobs For Americans

The Phony Recovery
by Paul Craig Roberts


The alleged recovery took a direct hit from Friday’s payroll jobs report. The Bureau of Labor Statistics reported that the economy created 74,000 net new jobs in December.

Wholesale and retail trade accounted for 70,700 of these jobs or 95.5%. It is likely that the December wholesale and retail hires were temporary for the Christmas shopping season, which doesn’t seem to have been very exuberant, especially in light of Macy’s decision to close five stores and lay off 2,500 employees. It is a good bet that these December hires have already been laid off.

A job gain of 74,000, even if it is real, is about half of what is needed to keep the unemployment rate even with population growth. Yet the Bureau of Labor Statistics reports that the unemployment rate fell from 7.0% to 6.7%. Clearly, this decline in unemployment was not caused by the reported 74,000 jobs gain. The unemployment rate fell, because Americans unable to find jobs ceased looking for employment and, thereby, ceased to be counted as unemployed.

In America the unemployment rate is a deception just like everything else. The rate of American unemployment fell, because people can’t find jobs. The fewer the jobs, the lower the unemployment rate.

I noticed today that the financial media presstitutes were a bit hesitant to hype the drop in the rate of unemployment when there was no jobs growth to account for it. The Wall Street and bank economists did their best to disbelieve the jobs report as did some of the bought-and-paid-for university professors. Too many interests have a stake in the non-existent recovery declared 4.5 years ago to be able to admit that it is not really there.

I have been examining the monthly jobs reports for a decade or longer. I must say that I as struck by the December report. Normally, a mainstay of jobs gain is the category “education and health services,” with “ambulatory health care services” adding thousands of jobs. In December the net contribution of “education and health services” was zero, with “ambulatory health care services” losing 4,100 jobs and health care losing 6,000 jobs. If memory serves, this is a first. Perhaps it reflects adverse impacts of the ripoff known as Obamacare, possibly the worst piece of domestic legislation passed in decades.

I was also struck by the report that the gain in employment of waitresses and bartenders, normally a large percentage of the job gain, was down to 9,400 jobs, which were offset by declines elsewhere, such as the layoff of local school teachers.

Aren’t Washington’s priorities wonderful? $1,000 billion per year in Quantitative Easing, essentially subsidies for 6 banks “too big to fail,” and nothing for school teachers. It should warm every Republican’s heart.

A tiny bright spot in the payroll jobs report is 9,000 new manufacturing jobs. The US manufacturing workforce has declined so dramatically since jobs offshoring became the policy of American corporations that 9,000 jobs doesn’t register on the scale. Fabricated metal products, which I think is roofing metal, accounted for 56% of the manufacturing jobs. Roofing metal is not an export. Employment in the production of products that could be exported, such as “computer and electronic equipment,” and “electronic instruments” declined by 2,400 and 3,500 respectively.

Clearly, this is not a payroll jobs report that provides cover for the looting of the prospects of ordinary Americans by the financial and offshoring elites. One can wonder how the BLS civil servants who produced it can avoid retribution. It will be interesting to see what occurs in the January payroll jobs report.

Inside the December Jobs Report

False Positives Revisited
by JACK RASMUS


In a blog post this past November 2013, this writer offered a contrarian analysis of the October 2013 government jobs report. That report indicated a jobs gain of 204,000 for October. While others heralded the number, claiming it was evidence that the US jobs market had (yet again) ‘turned the corner’, this writer forewarned the October job gains would prove temporary. My contrarian view was that the October job gains reflected a temporary surge in 3rd quarter U.S. GDP, which was itself based largely on a short term surge in business inventory accumulation that Qtr., with a lagged October hiring effect. The October jobs numbers were therefore “nothing to get excited about” and “can disappear quickly from the economy and may in fact do so by December should consumer spending come in well below expectations.” (see my ‘False Positives’ piece on this blog, of November 12, 2013).

It appears that ‘disappearance’ is what has happened, as last week’s December jobs report showed a net job gain of only 74,000. So what’s going on?

Last month’s jobs report shows not only that job creation has relapsed once again, but that weak job creation is not the only problem with the US labor market. While only 74,000 jobs were created, the labor force in the US shrunk by a further 347,000 workers in December as well. Hundreds of thousands of workers have been dropping out of the labor force in recent months. Both indicators—weak job creation and massive labor force exiting—reflect a labor market in deep trouble still, after nearly five years of so-called recovery.

The 347,000 exits from the labor force in December follow another, even greater exodus of 700,000 in October. Even if half of that number may be due to the government shutdown event of that month, it’s still another 350,000 exits. What the last three months shows, therefore, is that at least as many workers are leaving the labor force, as there are jobs are being created. A kind of a ‘churn’ is therefore taking place.

During the first six months of 2013, about two thirds of all the jobs created were ‘contingent’ jobs—i.e. part time and temp jobs—paying well below the average hourly rate. So in the first half of 2013 another kind of ‘churn’ was also taking place: full time jobs were being lost while part time and contingent jobs were being created. That also meant that higher paying jobs were being replaced by lower paying—a trend that has been going on for several years now.

That contingent hiring trend in the first half of the year has moderated somewhat in the second half of 2013, and replaced by the new trend of an accelerating exodus of workers from the labor force.

So it is not just stop-go, month to month job creation , but low-paid contingent job creation, and the massive number of workers leaving the labor force that together represent the major defining characteristics of the US labor market over the past year. It’s not a pretty picture.

The fact that between 700,000 and 1 million workers have left the labor force in just the last three months makes the unemployment rate as an indicator of the health of the jobs market an irrelevant statistic. Because of the way the US erroneously calculates the unemployment rate, a massive drop in the labor force results in a convenient fall in the unemployment rate. Those who leave the labor force are not included in the determination of the unemployment rate. They may be jobless, but aren’t included as unemployed in the government’s oxymoronic method for calculating unemployment. Consequently it is the mass exodus—not a big increase in actual jobs—that is lowering the unemployment rate.
Most serious economists know the unemployment rate is misleading, and don’t put much trust in the unemployment rate as an indicator. They supplement it by looking at other indicators: job openings, turnovers, quit rates, average work week, jobless claims, duration of unemployment, etc. But most of these are short term indicators, and can be volatile and unpredictable month to month.

A better indicator of the long term declining health of the US labor market is the labor force participation rate, and the related employment-to-population ratio. They show how well the US economy has been producing jobs longer term and as the population grows. And both these indicators continue to show a deep malaise in the US job market.

The labor force participation rate has steadily declined for years in the US, starting before 2008 and accelerating after. In June 2009, the declared official ‘end’ of the current continuing recession for the bottom 95% of us, the civilian labor force in the US totaled 154,926,000 workers. This past December 2013 the total labor force was 154,408,000. At first this appears as if there’s been no change in the labor force. However, one must include in this the estimate that, on average, about 100,000 to 150,000 new workers enter the labor force each month. Taking the low end 100,000 figure, it means in the four and a half years since June 2009, no less than 5.4 million workers have left the labor force. (100,000 x 12 months x 4.5 yrs). That’s about the same number of jobs created in the 4.5 year period.

In June 2009 approximately 139,800,000 workers were employed in the nonfarm labor force in the US. In December 2013, that number had risen to 144,400,000. So about 5 million new jobs have been created in the past 4.5 years, averaging 93,000 a month, while about 100,000 a month on average have also been leaving the labor force. (Numbers for both the labor force and nonfarm jobs above are from the US Labor Department’s ‘Current Population Survey’).

What we have therefore is a ‘great jobs churn’ going on in the US labor market since 2010—new entrants coming in at low pay, often contingent, service jobs while roughly the same number of workers leave the labor force who were once higher paid. And because the labor force drop outs aren’t counted as unemployed, it appears as if the labor market is improving since the unemployment rate is declining.

The December picture is even more dismal than the numbers above indicate. Both the 74,000 jobs and -347,000 drop in labor force that occurred in December 2013 are ‘statistics’. That is, they are not the actual numbers. Statistics are manipulations on raw data and actual numbers. They are ‘operations’ on the data, in most cased designed to smooth out the swings and fluctuations in the raw data that occur due to seasonality and other factors.

The raw data on jobs created and labor force exits for December show an even worse picture than that reported by the ‘stats’. The raw data show total nonfarm jobs actually fell by -246,000 instead of growing by 74,000, and the labor force declined by -502,000.

Whether statistically smoothed or the actual raw data, the jobs numbers for December were disastrous. Some argue the abysmal December numbers reflect a correction to the excessively high, 200,000 plus numbers for October and November. Others argue that the bad December numbers result from bad weather. But weather metaphors aren’t an explanation; they are an excuse for those without an explanation for what’s going on. And if the US government is consistently that inaccurate estimating jobs month to month—i.e. widely over-reporting one month and under-reporting another—then that should raise red flags about its methods to being with.

It may very well be that the Labor Department’s established methodologies for estimating jobs are today out of whack and unable to account for the fundamental changes in the labor markets that the recent deep recession has caused—such as the accelerating rise of contingent labor, the massive swings and exits from the labor force, the shift of millions from employment to disability insurance, a growing urban shadow economy that is misestimated in terms of jobs, methods for accounting for new business formation effects on job creation, the diversion of job creating investment from the US to offshore emerging markets and/or into financial asset speculation, the hoarding of trillions in cash by big multinational corporations, the increasing job displacement effect of capital investment, the negative effects of expanding free trade on jobs, and so on.

All this is not to say the December job statistics are purposely ‘falsified’ by the government in some conspiratorial fashion. The methods are perhaps just outdated. The Labor Department does report the raw data for jobs, for example. It is just that the capitalist media simply chooses to report the less severe statistical data as the sole ‘truth’, ignoring the raw data, and saying nothing about how changes in the real economy may be undermining the accuracy of the old statistical methodologies. Or the press hypes the weather as the cause of the poor job numbers, or suggests temporary technical factors are responsible.

However, neither technical factors nor bad weather are necessary to explain the poor December jobs numbers. In my initial ‘False Positives’ piece written in early November, it was suggested that the big surge in 3rd quarter 2013 GDP in business inventory accumulation likely explains much of the lagged big surge in October-November jobs. Business bulked up on inventories in the 3rd quarter, in what has proven to be an erroneous expectation of a big consumer spending surge over the recent holiday season. The production of those inventories, and expectations of follow-on retail sales in the closing months of 2013, explain the brief hiring surge in October-November—as well as the subsequent sharp slowdown (seasonally adjusted) or actual decline (raw data) in December jobs. The ‘False Positives’ piece predicted that the anticipated retail sales at year end would not follow the 3rd quarter inventory buildup—and that would all result in a major reduction in job creation by December.

Data for December just reported show an overall growth of retail sales of only 0.2%–which is a decline from a prior, already weakening, November number of 0.4%. In fact, retail sales have been consistently weak since the September ‘back to school’ event. Sales have slipped ever since. Sales this past holiday season were the worst since 2009, according to a ‘Market Watch’ business research review of the data, as of the week ending December 28.

At the heart of the December slowdown in retail were auto sales. Autos have been the major force holding up consumer spending throughout the past year. However now it appears the US auto market, after several years of historic discounting to boost auto sales, is now becoming relatively saturated. For example, GM’s auto sales declined 6% in December from the prior year and its truck sales even more.

While others note that non-auto retail sales rose in December, non-auto sales also reflected weak economic conditions as retailers introduced large discounts in the final weeks of the monthas it appeared consumers were reducing their expenditures. Those discounts will soon result in lower retail profits, and in turn therefore disappear in January-February 2014. Thus both autos and non-auto retail are therefore set to slow or even decline in coming months. In turn, the job creation picture could weaken still further in early 2014.

To summarize, what lies behind the December jobs slowdown, and the accelerating exodus of jobless workers from the labor force, is the likely pullback in business inventory spending at year end and the weak prospects for retail sales. Hiring slowed significantly at year end, and many of those that were hired in the fall—as inventories bulked up and big retail sales were anticipated—will soon be laid off once again.

Entering 2014, the picture will likely be one of further retreat in business inventory accumulation, more softness in retail sales, fewer hires, and a continuing slowdown in auto sales, and in turn fewer hires and more layoffs.

But the raw jobs numbers for early 2014 may be ‘smoothed out’ once again by the statistical changes forthcoming in early 2014, as the government is scheduled to change its ‘benchmarks’ for estimating jobs that could ‘statistically’ boost jobs by several hundred thousand. That statistical adjustment could effectively ‘drown out’ a continuing weak jobs creation picture when measured by the actual raw jobs data. It may appear the jobs picture is not as bad as it actually is in fact—when the raw data will show otherwise. But you won’t hear that from the mainstream press.