No, it wasn’t a “blow-out” jobs report. Inside the artificially bloated, trend-cycle adjusted headline number was the same old BLS con job and an economically devastating shortfall where it really counts. Namely, the US economy still has 2% fewer breadwinner jobs than it did 94 months ago at the pre-crisis peak in December 2007.
Actually, its worse. As is blindingly clear from the chart below, last month’s purportedly “awesome” jobs report contained 1.4 million fewer breadwinner jobs than existed way back in the very first month of this century!
So that’s not an awesome labor market; its the measure of a sick economy.
Indeed, the October pattern was even worse than normal. To wit, the reported number of high pay, high productivity jobs in mining, energy and manufacturing declined by 4,000, while the count of low-pay, part-time waiters and bartenders soared by 41,000.
Yes, the “Leisure and Hospitality” category of the BLS survey is somewhat broader——it also includes bellhops, hotel maids, parking attendants, hot dog vendors, stadium maintenance crews and the rest of the lodging and entertainment complex. These are all worthy and necessary endeavors, but they are mostly gigs, not jobs.
During October the average workweek in Leisure and Hospitality was just 26.3 hours. As a purely mathematical matter this means that a significant proportion of the job count in this category likely involved less than 20 hours per week of paid work.
Likewise, average gross earnings were just $380 per week compared to $1,035 in manufacturing, $1,385 in mining and energy and $1,604 in the utilities category. On an annualized basis, the latter category amounts to $83K, while the leisure and hospitality weekly rate annualizes to $19k or 77% less.
So there are jobs, there are gigs and there is a wide range of economic differentiation in between. But the notion that you can treat all jobs slots as economic equivalents, add them up and get anything more than statistical noise surely strains credulity.
Needless to say, this dubious metric has become the focal point of a monthly media feeding frenzy and the apparent #1 guidepost for central bank policy action. So with dumbing down like that it is virtually certain that the next economic and financial storm will come as a complete shock.
The degree of obfuscation owing to this all-jobs-the-same convention is evident in the trends in the establishment survey since January 2000. The bread and circuses jobs in the Leisure and Hospitality category, of course, are the first to be thrown overboard during recession, but they nevertheless have grown at a 1.8% per annum rate over the last 16 years.
That compares to a negative 1.5% rate for goods producing jobs and a positive 5.4% CAGR for home health workers. While it all adds up to a microscopic 0.4% annual rate for nonfarm payrolls as a whole, the resulting aggregate is self-evidently meaningless; the jobs mix has been changing radically—-and for the worse—-on an unrelenting trend for this entire century.
In any event, I seriously doubt that 41,000 Leisure and Hospitality Jobs were actually created last month——owing to the blatant statistical finagling by the BLS called trend cycle adjustment. Indeed, the smoking gun is right here in the waiters and bartenders count.
As shown below, during the 26-month period between the December 2007 start of the recession and the February 2010 establishment survey bottom, this category lost an average of 26,000 jobs per month. And then, viola, during the next 26 months it gained nearly an identical amount—–29,000 per month.
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