fresh voices from the front lines of change







With apologies to Richard Farina, today’s Bureau of Labor Statistics jobs report for October shows small gains that for most of U.S. history would have been considered meager but must now be seen as better than expected. (See these tables and graphics on this month's weak jobs growth and the 11-year-trend for my detailed analysis.)

After all, over the past 11 years (Oct. 2000 to Oct. 2011) despite population grown of just over 30 million people, the U.S. now has lost more than 1.8 million private sector jobs. But the 11-year job loss—the first since the 1930s—was worse earlier this year.

And while today’s BLS report shows a gain of only 80,000 jobs in October, it also revises upward the number of jobs in the previous two months by a total of 102,000. That is, there are 182,000 more jobs in October than BLS previously estimated for September. The economy has now added jobs for 13 months in a row, adding 1.5 million year-over-year. Private sector job growth now has occurred for 22 consecutive months, adding over 1.8 million jobs year-over-year—partially offset by the loss of government jobs, mostly in local and state government – one-third in public education.

“Average” nominal private sector wages rose 0.2% in October, likely keeping up with inflation that the BLS will report on November 16. And the average real weekly wage for September was revised upward slightly which, together with the upward revisions to the number of jobs in August and September means that the decline in real per capita disposable incomes in those months was not as sharp as currently reported and will be revised upwards later this month by Bureau of Economic Analysis. Unless household spending is also revised, this also suggests that the plunge in household savings to a 3.6% rate for September also may be revised slightly upwards.

Continuing a long-term trend, most new private sector jobs in October again were for “non-supervisory/production” positions, with fewer than one in eight new jobs considered in the generally higher-skill, higher-wage “supervisory” category. “Professional and Business Services” added 32,000 jobs in October but only 3,000 of these were in its generally higher-wage subcategory of “professional and technical services”—and even here distinctions cannot be made between professional and support staff. Most new “professional and business services” jobs in October were for lower-wage subcategories “temporary help services” and “services to buildings and dwellings.”

Generally lower average wage private health care and education bureaucracies added another 28,000 jobs in October, retailers added 18,000 jobs and restaurants/caters and bars added 13,000 jobs. Still generally higher-wage manufacturers of transportation equipment also added 10,000 jobs in October, including the much-hyped “comeback” Auto and Parts industry which added 6,000 jobs.

The official unemployment rate in October edged down to 9.0% from 9.1% in September but this, too, masks a relatively hopeful development. The BLS’ survey of households – which produces the unemployment figures – found 277,000 more people claiming to be employed in October. And this comes after BLS found 398,000 more claiming to be employed in September and 331,000 more employed in August. Many of these million newly “employed” over the past three months are self-employed entrepreneurs and many may be spending down savings to start a business rather than earning net income. Still, this is a big and hopeful turnaround from recent months and most of the past four years of decline.

The official unemployment rate did not drop further in October (and in recent months) because the number of people who say they are working or actively looking for work also rose sharply in October and in August and September—by a total of almost one million. But there are STILL 755,000 fewer people now than in October 2008 counted by the household labor force survey as either working or looking for work—continuing the first sustained three-year decline in the size of the labor force on records to 1947. The average time that people still counted as jobless and actively searching for a job in October declined slightly to 39.4 weeks—nine months—almost double the worst previous average search time on record. If the number of people counted in the labor force had continued rising normally over the past three years, the official jobless rate even now would be a record of near 13 percent.

Today’s BLS report shows 13.9 million people still officially counted as unemployed, 8.9 million working part-time but wanting full time work and another 6.4 million people who have stopped looking for work but say they want a job. That is, there are now 29.2 million people wanting work in America.

And current labor market conditions cannot remotely be understood without an appreciation for the eleven year record of the 21st century. Over the past 11 years, while just more than 30 million people have been added to the U.S. population, the country has lost 600,000 total jobs including the loss of 1,836,000 jobs (1.6%) in the private sector. This is the first time since the eleven years ended in 1938 – when the government prematurely cut jobs and stimulus programs to reduce deficits – that U.S. job growth has not averaged 1 percent-to-3 percent per year.

Over the past 11 years the U.S. has lost 7.3% of its private, supervisory jobs. The manufacturing sector lost 5.5 million (31.7%) of its jobs, with major losses in every sector—including the loss of 53 percent of jobs in communications equipment producers, 44.7 percent of jobs in semiconductor producers and 45.2 percent of jobs in the recently-hyped “comeback” U.S. auto and parts producing industry. The loss of $6.4 trillion in production from U.S. global trade deficits over the past 11 years has taken a devastating and lasting toll.

Information services, much hyped a decade ago, has lost more than 1,020,000 jobs (27.7%) in the past 11 years. Multiple foreign military actions and intensive “homeland security” has helped generate massive government contraction and 602,000 private sector jobs in computer systems design and technical consulting. But the major sectors for off-setting job growth are private health care and education bureaucracies which added over 4.9 million jobs over the past 11 years and restaurants/caterers and bars that created almost 1.4 million new jobs.

Government job growth over the past 11 years was also vital in offsetting private sector job losses. Most of the 1.2 million new jobs in government agencies were created at the local and state level, with two-thirds of the new jobs created in public education. While job gains (and household expenses) continue in private health care and education, local, state and federal government jobs are now being slashed (323,000 lost year over year) – including in public education.

So, today’s BLS report on meager job growth in October is better than expected. But it is in a context of intense and widespread hardship in America unknown and largely unimagined since at least 1938 … and profound insecurities about what may lie ahead.

Charles W. McMillion, Ph.D. is president and chief economist of MBG Information Services.

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