John Mauldin has some trenchant thoughts in his latest newsletter. Here’s an excerpt.
A Few Thoughts on the Nonfarm Payroll Number
First, this was a continuation of a five-month run of relatively good nonfarm payroll numbers. You can see the GDP recession in the January and February reports which gave us lower payroll numbers. That recession is gone away. There are no wage pressures in the latest report, with earnings rising a meager $0.06 an hour, or the more positive sounding 0.2% y/y. Unemployment fell to 6.1%, but the broader unemployment measure, U-6, barely budged, at 12.4%.
Joan McCullough ran U-6 down for us:
Including this from EPI (Heidi Shierholz) who runs this calculation every month called “Missing Workers”, a/k/a/ those who have dropped off the radar screen for a host of reasons.
June 2014: *5.98 mil (*roughly half of that number are of prime working age. Aint’ that grand? SOS.)
UE Rate if you add those back into the labor force: 9.6%
Compare that number to the official rate of 6.1%
Ms. Shierholz also estimates that “even if we saw June’s rate of job growth every month from here on out, we still wouldn’t get back to health in the labor market for another two and a half years.” … http://www.epi.org/publication/missing-workers/
. . .
Now here’s the big joke of the whole deal:
Employed persons at work part time:
Part time involuntarily +275k
Because hours cut back +72k
Because that’s all they could find +111k
Part time voluntarily +840k
That is seriously pathetic and makes me wonder about the Retail adds +40k and the Leisure & Hospitality adds +39k. Low-paying, less than 40 hour a week jobs? You bet. Ditto Health care and social assistance, which clocked in with a hefty 33.7k.
But it also explains why, with 288k bodies added, the average workweek is not budging. Translation: they are hiring more workers instead of increasing the hours of existing workers. Which suggests that maybe this is more of what we have seen already: the quest to hire part time employees to avoid the benefits baloney.
Use your head. If we really created 288k jobs. And 275k folks were made involuntarily part-time, then this suggests that there are still way more candidates than there are openings.
When some of us pointed out, when the Affordable Care Act (Obamacare) was being debated way back in 2010, that the bill would result in an extraordinarily large number of temporary and part-time workers, we were called delusional and told we were just using that argument to oppose the ACA. It turns out, Mr. Krugman et al., that we were right. An unintended consequence of the ACA is a dramatic increase in part-time employment, especially among young people. There is no disputing this, unless you are willing to ignore the clear data from the BLS.
Precisely when young people are starting their careers and should be able to land “starter jobs” and look forward to establishing themselves, they now have to hold down multiple part-time jobs in order to simply survive. Gods forbid they have a kid or two.
I don’t know when the topic of reform of the ACA will actually be allowed to come up in the House, let alone the Senate. I don’t think there is anyone who thinks the increase in part-time jobs due to the ACA is a good thing. There are at least two or three different ways to fix it, but until both parties are willing to address some seriously needed reforms, we are stuck in a world where our kids will suffer because of the stubbornness of both the Republicans and the Democrats.
This is one of those topics where I wish both parties could simply see past the forest to say this particular tree needs to be trimmed, and we will worry about the other trees later when one party gets enough power to adopt some further changes. For now, our kids and those with fewer skills are paying the price.
All is proceeding as many conservative and ‘orthodox’ economists had forecast. Obamacare hasn’t only disrupted the health care system and vastly increased costs and complexity; it’s also screwed the labor market. It’s going to take years to recover from this catastrophe, even if we succeed in getting Obamacare repealed (which should happen at the earliest possible opportunity, but given the opportunities for graft and influence-peddling it provides on both sides of the political aisle, probably won’t . . . ).