Phony Employment Report
By Paul Craig Roberts
October 06, 2012 "Information
- October 5. Today’s employment report from the Bureau of
Labor Statistics shows 114,000 new jobs in September and a drop
in the rate of unemployment from 8.1% to 7.8%. As 114,000 new
jobs are not sufficient to stay even with population growth, the
drop in the unemployment rate is the result of not counting
discouraged workers who are defined away as “not in the labor
According to the BLS, “In September, 2.5 million persons were
marginally attached to the labor force.” These individuals
“wanted and were available for work,” but “they were not counted
as unemployed because they had not searched for work in the 4
weeks preceding the survey.”
In other words, 2.5 million unemployed Americans were not
counted as unemployed.
The stock market rose on the phony good news. Bloomberg’s
Stocks Rise as Unemployment Rate Unexpectedly Drops,”
A truer picture of the dire employment situation is provided by
the 600,000 rise over the previous month in involuntary
part-time workers. According to the BLS, “These individuals were
working part time because their hours had been cut back or
because they were unable to find a full-time job.”
Turning to the 114,000 new jobs, once again the jobs are
concentrated in lowly paid domestic service jobs that cannot be
offshored. Manufacturing jobs declined by 16,000.
As has been the case for a decade, two categories--health care
and social assistance (primarily ambulatory health care
services) and waitresses and bartenders account for 53% of the
new jobs. The BLS never ceases to find ever growing employment
of people in restaurants and bars despite the rising dependence
of the US population on food stamps. The elderly are rising as a
percentage of the American population, but I sometimes wonder if
employment in ambulatory health care services is rising faster
than the elderly population. Whether these reported jobs are
real, I do not know.
The rest of the new jobs were accounted for by retail trade,
transportation and warehousing, financial activities (primarily
credit intermediation), professional and business services
(primarily administrative and waste services), and state
government education, where the 13,600 reported new jobs seem
odd in light of the teacher layoffs and rise in classroom size.
The high-tech jobs that economists promised would be our reward
for offshoring American manufacturing jobs and tradeable
professional services, such as software engineering and IT, have
never materialized. “The New Economy” was just another hoax,
like “Iraqi weapons of mass destruction” and “Iranian nukes.”
While employment falters, the consumer price index (CPI-U) in
August increased 0.6 percent, the largest since June 2009. If
the August rate is annualized, it means bad news on the
inflation front. Instead of bringing us high tech jobs, is “the
New Economy” bringing back the stagflation of the late 1970s?
Time will tell.
Craig Roberts was Assistant Secretary of the Treasury for
Economic Policy and associate editor of the Wall Street Journal.
He was columnist for Business Week, Scripps Howard News Service,
and Creators Syndicate. He has had many university appointments.
His internet columns have attracted a worldwide following.paulcraigroberts.org/
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