Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

07 October 2012

Further Comments on the Dismal September Jobs Report

Here are some further comments on the September jobs report we should all be aware of:

  • The increased employment of Americans only affected white Americans.  The employment rates for blacks, Hispanics, and teenagers were unchanged at their much higher rates.
  • The long-term unemployed number changed little.  40.1% of the unemployed have been unemployed for more than 27 weeks.
  • The number of people employed part-time for economic reasons increased by 600,000, which is equal to most of the 775,000 new jobs that were supposed to have been created in September according to the household survey!
  • The establishment survey total non-farm payroll employment was up by only 114,000 in September, which is way below the anemic 2012 average of 146,000 per month and still more below the pitiful average per month in 2011 of 153,000.  It is important to note that 114,000 establishment jobs is far, far less than the household survey number of 775,000.
  • Employment rose in health care, transportation, and warehousing.  The increase in transportation and warehousing at this time of year may be in anticipation of Christmas.
  • Manufacturing employment dropped by 16,000 jobs.
There was a 206,000 person increase in the working age population available for work in September according to the household survey.  If the same fraction of these people were to become employed as were in January 2000, when jobs were plentiful, then 133,426 of them would have needed jobs in September.  Even to hold the sorry ground now in which a smaller fraction of the population is employed, 121,128 would have needed jobs.  Established non-farm businesses only provided 114,000 jobs, so this population growth was not even accommodated.

On the other hand, the household survey data says many more new jobs were created, so most of those additional jobs are self-employed or in the farm sector.  We also know most of those jobs are part-time jobs due to that 600,000 increase in part-time jobs.  My expectation is that many of these jobs are due to people who have been long out of work setting up their own business at home.  We know this to have been the case for a very large fraction of the new jobs created since the depths of the recession.  Desperate families may also have wives who are raising children setting up more businesses to earn a few dollars to pay for the rising cost of living and to supplement the falling incomes of husbands.  We know that women have been setting up their own small businesses in record numbers.

Median household income adjusted for the official, understated cost-of-living was down to $50,054 in 2011, or 8% less than in 2007.  Properly adjusted, household incomes were even more degraded.  This should drive people into the part-time workforce who would not normally be there.  So, while capitalized start-up businesses have been way down, home businesses with no real capital have been growing in numbers.  Unfortunately, most of them generate considerably less income than would a job at an established business.

It has been pointed out that in years past, employment of 18 to 25 year olds has fallen drastically in September as students returned to college and gave up their summer jobs.  Not this September.  Also not last September.  I suspect two things are going on here.  One is that these last two summers, many fewer students were able to find jobs in the summer, so the student drop in employment in September was much less due to them returning to college.  The other effect is that with college expenses having increased much more than family incomes have for many years and the actual loss of real family incomes over the last few years, many more students may have very part-time work-aid assignments at their colleges as part of their student-aid package.  In the past, the BLS was inclined to ignore these very part-time college jobs and not count these students as employed while in college.  What if they are now very assiduously counting these work aid students as part-time employed in the household survey?  This would account for the strange increase in employment of 18 - 25 year olds these last two Septembers and for the huge increase in part-time jobs precisely in the month of September.  [Update on morning of 10 October 2012.]

We are also hearing more and more reports that many businesses such as restaurants and other service businesses are more and more reluctant to hire full-time employees with the onset of the ObamaUncaringTax program, sympathetically called ObamaCare.  There is already a switch to hiring part-time workers.  Restaurants are adopting the policy of mostly hiring people for 28 hours a week.  An employer needs to hire about 43% more people at 28 hours a week compared to at 40 hours a week.  That is good for a major surge in hiring which Obama is happy to claim is all his doing.  In a way it is, since he gave us ObamaUncaringTax.  Of course that program will ultimately also cost Americans not just full-time jobs, but it will also decrease the total number of hours for which people are hired across the nation.

Overall economic activity will slow as a result of ObamaUncaringTax.  In addition to discouraging the optimal use of employees, it will also be adding to the corporation tax and making us still less competitive with the corporations of other countries.  It adds to our medical care and insurance costs, redirecting the additional money we are forced to spend on overburdened doctors and hospitals from other parts of the economy.  There was already going to be considerable redirection of money into the medical sector due to the aging of the Baby Boomers.  That was already going to cause many problems in our society, including people losing jobs in other industries as a result.

Now Obama and the Democrats have decided to make that problem and the wrenching effects much worse by adding many more medical service demands from younger, more healthy Americans.  After all, if you have to pay for a government approved plan with a low deduction and with many services most Americans have not previously thought were worth paying for, you are going to use more medical services.  Doctor visits for reasons of low importance will go way up.  Pity the frazzled doctors, except those with enough intelligence to refuse to take time for such patients.  In practice, that will mean that more doctors will be refusing to take Medicaid patients and those on ObamaCare insurance that pays them less than the free market would under their still more over-worked conditions.

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