The media misleading about job growth: Full-time jobs falling, part-time service sector jobs up

The media talks about what a great jobs report came out today.  Take CNN's headline: "Great jobs report: Strong hiring, unemployment down"

The U.S. economy added 288,000 jobs in June, the Bureau of Labor Statistics reported Thursday. 

That number beats economists' expectations and comes along with other good news: Job growth was revised higher for both May and April. 

Taken altogether, that means employers added 1.4 million jobs in the first six months of the year. 

That's the strongest six months for job growth since 2006.  

Meanwhile, the unemployment rate is now 6.1%, down from 6.3% in May. The drop came for the right reasons: More Americans said they had jobs, plus more people joined the labor force. . . .

Barron's has the title "Dow Tops 17,000 on Stellar Jobs Report"
Jobs did rise, but they are part-time, not full-time jobs.  Indeed, full-times jobs has fell significantly and has been down slightly since the beginning of the year.

Unfortunately, the jobs are not only part-time, but about 80 percent are service sector jobs.

It is pretty amazing how the media keeps on making the economy look better than it is.

One thing that is clear is that the percentage of long term unemployed as declined since the long term unemployment insurance benefits were reduced.

So much for the claim that people are retiring early as the explanation for the drop in labor force participation, drop in participation rate for 25 to 54 year olds

Click on figure to make it larger.

"Putting America back to work": Appearance on Canada's Sun News with Brian Lilley

March 7, 2014 20:23
Economist John Lott discusses the employment situation in the United States coming out of the great recession.

So how bad is the US job market?

The United States still has 866,000 fewer people employed today than when the recession started, but the working age population as grown by 14 million.  That is a recovery?  There is no comparable recovery.  Since Obama became president there has been a 3.5 million increase in jobs but 12 million new working age people.  In other words, that the increase in jobs equals only 29.2 percent the increase in the working age population.  It gives an idea of how far we are losing ground.

Newest Fox News op-ed: "Why most Americans believe the US economy is poor (and they're right)"

My newest piece at Fox News starts this way:

It has been over four-and-a-half years since the economic “recovery” began, yet a new CNN poll indicates that almost seven out of every ten Americans considers the economy to be in poor shape.   

Democrats want to claim that the economy is improving at the same time that they will be pushing Monday for a continued extension of unemployment benefits. Democrats also refuse to acknowledge that up to two years of unemployment insurance benefits actually creates unemployment. 

Indeed, people are so worried about the job market that they are clinging to their current jobs at remarkably high rates. 

Quit rates that usually rise after recessions, particularly after long recessions when they have stayed with jobs they might not care for, are still lower over the last three months than they were during the recession. 

But how can that possibly be?   

The official unemployment rate keeps falling. We are told that the job market is improving.  Are Americans just not realizing that things are getting better? Or do they perceive of something that the unemployment numbers are not picking up? . . .

Nearly 70% of Americans say the economy is generally in poor shape

From CNN Money:

Despite a recent string of positive economic news, Americans say they aren't feeling the improvements. 

A new CNN/ORC poll released Friday showed people were pessimistic that the economy was improving. Nearly 70% said the economy is generally in poor shape, and only 32% rated it good. . . .

The missing unemployed, what the unemployment rate is missing

The press realizes that millions of Americans are just giving up and leaving the labor force.  Indeed, if the same percentage of the population were working as was working when Obama became president in January 2009, there would be about 7.2 million more Americans working today and over 8 million more Americans in the labor force.  But those 8 million Americans have given up and are no longer looking for work.  If those people were still in the labor force, instead of an unemployment rate of 7 percent, the rate would be 10.9 percent.

Now some of the lower labor force participation rate is due to the aging population.  One way to account for this is to look at just those between the ages 25 to 54.  This will also underestimate those who have left the labor force as many of those over age 55 have simply retired and people under age 25 who faced a bleak job market have simply stayed in school longer.

Ideally, it would be nice to look at everyone under age 65, but it would have taken me a little while longer to get that data together.  The actual drop in the unemployment rate (or the "non-drop") is something between these two blue lines.

The Illusionary Drop in Unemployment, how the drop in unemployment is due to people leaving the work force, not them getting jobs

Click on figure to make it larger

The red line shows how the actual unemployment rate over time.  The blue line shows shows how the unemployment rate has changed since Obama became president if one assumes that the labor force participation rate hadn't plummeted since he became president.  Once one takes into account those who are simply leaving the labor force, the unemployment rate isn't getting noticeably better since the end of 2009.

Obama waits until the very last day to be upset about the extended unemployment benefits and Democrats plan on using this as a campaign issue

UPDATE: Senate Democrats will put up a vote on jobless benefits on Monday, but if this is really so important, you would think that they could find some money to pay for this spending.  It seems as if they really want it to be defeated.  From Fox News:

Senate Majority Leader Harry Reid says his chamber will vote Monday on extending long-term jobless benefits and that he plans to outline his 2014 legislative agenda in the coming days.
The benefits were not included in a two-year budget deal Congress reached in December, cutting off unemployment checks for 1.3 million Americans out of work longer than six months.
Reid, D-Nevada, is optimistic that the bipartisan legislation in the Senate will get enough support from members of both parties to win passage in the Democrat-controlled chamber.
However, he offered no prediction on whether it will pass in the Republican-led House.
"I don't predict anything in the House," Reid told the Associated Press before describing the lower chamber as a "black hole of legislation."
President Obama has endorsed the proposal, but Republicans in the House have insisted that any renewal of the extended jobless benefits be offset. . . .

ORIGINAL POST: Obama signs the budget deal without the extended unemployment benefits.  Now on Saturday, with just hours to go before the extended benefits expire, he speaks out against the extended benefits ending.  Earlier Democrats waited until a budget agreement was basically reached before they raised the issue of extending benefits further.  As if to ensure that there wouldn't be an agreement, Democrats refused to agree to other cuts to pay for these benefits.  From Politico:

“This literally came out of nowhere yesterday, and it is totally disingenuous of them to put this in play at this point,” one Republican familiar with the talks said. “They know the impact this will have on our side of the aisle, so I can only read this as a deliberate attempt to blow up any deal.” . . .

Now of course, you have articles in The Hill newspaper about how Democrats are going to make a political issue of this cut in benefits.

Democrats are seizing on the expiration of federal unemployment benefits to batter the GOP ahead of the midterm elections.   They say Republicans are to blame for the failure of Congress to renew jobless aid for 1.3 million of the long-term unemployed and are making the point repeatedly in a coordinated messaging blitz over the holiday break. . . . 

President Obama has called for a three-month retroactive reauthorization of the program, and Senate Majority Harry Reid (D-Nev.) vowed to make it the first order of business when the Senate reconvenes in January. 

“I will ensure that extending unemployment insurance is the first thing we vote on after the holiday,” Reid said last week. A Senate vote could put Republicans in a tough spot. . . .

Here is my take on the issue of topic from three years ago.  The Democrats keep wanting to make the extension a campaign issue.  If this is so crucial, why can't the Democrats find any savings from other programs to fund it?

The extension of unemployment insurance benefits is expected to  pass the Senate today. Despite President Obama's attack on Republicans for delaying the bill, it could easily have passed a month ago if Democrats hadn't added so many other unrelated radical measures to it -- from higher taxes to changes in the Medicare reimbursement formula.  My piece from Fox News starts this way:

The bill President Obama has been hammering Republicans over in the last couple of days has been puzzling since he already knew that he had enough Republican votes to overcome any filibuster and pass the extended benefits. 

The problem, though, isn't that there is insufficient Republican support to pass it. The problem is that the bill will ultimately increase long term unemployment and it will reduce our GDP. 

Ironically, if some of Obama's attacks are correct, Republicans can only be accused of trying to help  Obama's presidency.  

Suppose, as the president said on Monday, that Republicans really believe "that emergency relief somehow discourages people from looking for a job."  If that were true, those Republicans who are opposing the added extension of benefits would believe that defeating it would lower the unemployment rate. . . .

Democrats think that they have this issue on their side.  From Real Clear Politics:

. . . The battle has become the starter’s pistol of the midterm election year, pitting Democrats’ belief that the benefits are necessary and help buoy a still-wobbly economy, against Republican arguments that growth and hiring would gain strength more quickly if Washington keeps its spigot turned off and leaves unemployment compensation to the states. 

Recent polling suggests Democrats have the stronger argument with the public across regions, genders and age groups. A majority of voters say they want Congress and the president to maintain the benefits, according to a survey of 811 registered voters conducted Dec. 18-22 by Hart Research Associates. The poll found that 55 percent of voters think the federal emergency program should continue, while 34 percent say benefits should cease. 

In urging an end to the federal program, in part because of a belief that it feeds dependency, many Republicans are playing with fire heading toward midterm political contests, the Hart pollsters said Dec. 26. . . .

The op-eds are out there pushing the Democrat line.  From Eugene Robinson:

It would be one thing if there were a logical reason to cut off unemployment benefits for those who have been out of work the longest. But no such rationale exists. On both economic and moral grounds, extending benefits for the long-term unemployed should have been an automatic bipartisan vote in both houses of Congress. 

It wasn't. Nothing is automatic and bipartisan anymore, not with today's radicalized GOP on the scene. In this case, a sensible and humane policy option is hostage to bruised Republican egos and the ideological myth of "makers" versus "takers." 

The result is a cruel blow to families that are already suffering. On Saturday, benefits were allowed to expire for 1.3 million people who have been unemployed more than six months. These are precisely the jobless who will suffer most from a cutoff, since they have been scraping by on unemployment checks for so long that their financial situations are already precarious, if not dire. 

Extending unemployment benefits is something that's normally done in a recession, and Republicans correctly point out that we are now in a recovery. But there was nothing normal about the Great Recession, and there is nothing normal about the Not-So-Great Recovery. 

We are emerging from the worst economic slump since the Depression, and growth has been unusually -- and painfully -- slow. Only in the past few months has the economy shown real signs of life. Job growth is improving but still sluggish, with unemployment hovering at 7 percent -- not counting the millions of Americans who have given up looking for work. . . .

American workers have unprecedented "anxiety" about jobs and economy and their fear is justified

The polls are showing what the job numbers have been showing for some time.  Quits are supposed to fall during recessions and rise during recoveries (data from the JOLTS file at the BLS).  The explanation is simple: during recessions people are afraid to quit their jobs.  The longer the recession the greater the increase in quits as there is a pent up demand for people switching jobs.  Not so during this recovery.  Quits fells amazingly fell even further.  Only now during the most recent three months is the quit rate back to the level during the recession.  

Unbelievably, monthly job hires are now only slightly greater than they were during the recession.  They are still 13% below the level prior to the recession and just 4% above the level during the recession.

From the Washington Post (click to make screen shot larger):

Did the Obama administration doctor unemployment data to help him win reelection?

For the Obama administration to have done something this outrageous rand this dangerous, they must have believed this data made a difference in the presidential race.  I had been asked by reporters about whether the unemployment data was rigged, but I said that I couldn't believe that was the case because it would eventually be detected and the consequences of being caught would be tremendous.  From The Hill:

“The allegation that data gathered by the Census Bureau is being manipulated for any reason is extremely serious. The Oversight Committee has jurisdiction over the Census Bureau and will be thoroughly investigating these claims,” he said in a statement. 

Farenthold chairs the Oversight subcommittee with jurisdiction over the census. A bureau representative did not respond to a request for comment. 

The unemployment rate is calculated by the Labor Department based on survey data of 60,000 households, conducted by the bureau. 

The Post report claimed that a census employee fabricated data for survey respondents he could not contact. The employee, Julius Buckmon, told the publication he was told to do so by superiors, and the report claims there were multiple employees doing the same. . . .

Evidence that the changes in part-time jobs over this year have been related to the employer health insurance mandate

If you graph out the data on the change in part-time jobs and take into account that the Obama administration announced a temporary delay in the employer mandate in early July, it sure looks like part-time jobs were increasing for a few months as employers thought that they were getting closer to the mandate going into effect and that as soon as the mandate was put on hold there was a sudden drop in part-time jobs.  The reason that others are missing this pattern is that they aren't taking into account the Obama administration announcement and the fact that there is no reason to push people into part-time employment a long period of time before the rule finally goes into place.

Note that there were no similar sudden swings in full-time jobs over the same period of time.

With the one year delay, the number of part-time jobs seems to have gotten back to its original trend.  If I am right, we will again see an increase in part-time jobs next year.  Obviously these changes are small, but it appears that this small variation could be related to Obamacare.

The data from the BLS.gov is available here.

Jay Leno on Syria and the REAL reason the unemployment rate has fallen

Leno's discussion about the reason for the drop in the unemployment rate is right on.

Obama's CEA hides impact of the Affordable Care Act on part-time workers by looking at wrong time period

Betsey Stevenson, who is with the Obama's Council of Economic Advisors and also Justin Wolfers' wife, has this claim:

New data out today in the Bureau of Labor Statistics Monthly Employment Report show that of the increase in employment since the Affordable Care Act became law, more than 9 out of 10 positions have been full-time. . . .

So how is this consistent with my previous post that "96 percent of net jobs added this year have been part-time jobs"?  There is a simple explanation.  They are looking at the change in jobs since March 2010.  My discussion was clearly only about the changes that have occurred this year.  To me it doesn't make much sense to look at the change over the entire period because many of the regulations didn't start for years.  For example, what if that the change was due to the employer mandate?  But that regulation was not supposed to go into effect until the end of this year.  Given that firms apparently preferred full-time workers for these jobs, there is no reason to expect them changing the jobs from full-time to part-time so far in advance.  Obama's economists don't really explain why they expect noticeable changes to occur 3.75 years before the employer mandate.

Just to remind people of the pattern in full-time and part-time jobs this year.

Newest Fox News piece: "Jobs numbers reflect another bleak month for American workers"

My newest Fox News piece starts this way:

Friday’s new job numbers show something workers already knew: they face a very bleak job market. Unfortunately, Americans have been facing tough times for many years now. According to the latest Gallup poll, Obama’s job approval rating on the economy stands atjust 35 percent. 

After over four years, this continues to be, by far, the worst recovery on record. And that goes for income as well as for job growth. 

Too often the media’s gauge of whether the economy is improving rests solely on the number of jobs created or the unemployment rate. And indeed, 169,000 jobs were added in August, but what is rarely mentioned is that at the same time 204,000 more working age people were added to the workforce. 

True, the unemployment rate has also fallen from its peak of 10 percent down to 7.3 percent. But that doesn't mean many new jobs. . . . .

Continued weak job growth during Obama's recovery

Updated with today's new jobs numbers

Click on figure to make it larger.

Hiring and Quits have both still lower than they were during the recession

Hiring falls during a recession, but it has continued to fall during this "recovery."  Amazingly, we are 4 years into the "recovery" and monthly hiring over the last three months is still slightly lower than it was during the recession.  Who would have thought that was possible?

Quits over the last three months are also still lower than during the recession.  To put it simply, people are apparently more afraid of quitting their jobs now than they were during the recession.

This data is from the BLS.gov JOLTS data.

Comparing job growth over recoveries since 1970

Note that job growth during a recovery is usually greatest after more severe recessions.

97% of the jobs added this year are part-time jobs.

So far this year there have been 963,000 new jobs.  Of those, 936,000 are part time jobs (272,000 for economic reasons and 664,000 for noneconomic reasons).  To put it differently, an incredible 97% of the jobs added this year have been part-time jobs.  28% of the jobs added were part-time jobs where people had tried for full-time jobs.  From the BLS.gov.

Job Growth in the current recovery has continued to fall farther and farther behind job growth in previous recoveries

However one compares the current recovery to previous ones, job growth in the current recovery is falling further behind previous recoveries.  The gap is at or near the largest the gap has been compared to recoveries after either mild (2.63%), severe (9.65%) or average (7.00%) recessions.