Another Tepid Jobs Report Raises More Questions than it Answers

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Tim Boyle / Bloomberg / Getty Images

Job seekers stand in line outside a job fair in Chicago, July 25, 2013.

The Labor Department announced today that the U.S. economy added 162,000 jobs in June and that the unemployment rate fell two-tenths of a percentage point to 7.4%. The feds also said that job growth in April and May was slower than initially thought, with 23,000 fewer jobs being added than was previously reported.

The headline job growth number represents fairly solid overall growth. That figure is still ahead of the 75,000 to 125,000 jobs needed each month to stay ahead of population growth, even if it falls short of the 200,000 per-month job growth we’ve seen recently.

But for market participants, this jobs report most likely raises more questions than it answers, mostly because it’s difficult to tell exactly how the Federal Reserve will react. Previously, Fed Chair Ben Bernanke has said that a 7.5% unemployment rate is an important threshold, below which the central bank would consider slowing the pace of its bond purchases, popularly known as “quantitative easing.”

Though the significant drop in the unemployment rate looks like great news, the data underlying today’s report paint a checkered picture. The two headline figures in the employment situation report — the total number of jobs added and the unemployment rate — are drawn from two different surveys, of companies and households respectively. And according to the household survey, the labor force shrunk by 37,000 people, a dynamic that helped drive down the unemployment rate.

(MORE: The Female Labor Market Is Actually Stagnating)

The so-called “labor force participation rate” or the ratio of folks in the labor force to the total working-age population declined by 0.1%,  a reversal from previous months when the participation rate had been creeping up. This number is a key metric that economists will be watching going forward to measure the health of the job market.

As I’ve written previously, the participation rate has been on the decline for more than a decade as the number of retired Americans increases due to a generally aging population. But the weakness of the economy has caused this decline to accelerate, as some Americans choose to stay in school longer or opt for early retirement simply because the lack of good job opportunities.

Other metrics that are cause for concern include average hours worked and average hourly pay, both of which declined by 0.1 hours and 2 cents, respectively. It’s in these numbers that we may be seeing effects of sequestration-related budget cuts, as many government agencies have decided to put workers on one-day-per-week furloughs in lieu of laying off workers entirely.

Bernanke has said that the unemployment rate isn’t the only figure he’ll be looking at when deciding when to scale back stimulus. As today’s report shows, a drop in the unemployment rate can be caused as much by a shrinking labor force as by a robust and growing economy. Many market watchers had been expecting that the central bank would announce a tapering of its quantitative easing program after its meeting in September, and one could find evidence in today’s report that the Fed will stick to this timeline, or that it will decide to wait a few months before tapping the breaks.

(MORE: Fewer Americans Will Work: What That Means for the Economy

23 comments
SukeMadiq
SukeMadiq

Technology is also killing jobs, even some farm tractors now run without an operator using GPS.  Factories are more automated and our labor can't compete with wages with countries like China unless people want to work for 50 cents an hour.  Technology has made outsourcing much easier, this is the capitalist way people.

No politician or policy can stop many jobs from going away...

SukeMadiq
SukeMadiq

Got to love ghetto trash showing up to apply for a job in a sweatshirt!

notLostInSpace
notLostInSpace

The not liberal media at work.  "Tepid".  The whole feel of the article is negative.  It's not supposed to be positive, but if it was "liberal" like all the Faux fans think it is, it would be thrilled that 162000 found jobs, ahead of population growth, and DESPITE (or perhaps in spite of) the total inaction from Washington DC.

Galen
Galen

The always slowly recovering economy, speaks more to the worthlessness of the House of Fools, since 2010. How much could our country and economy be further ahead??? Ask Bonner, and the rest of the House extremists, at the cost of the collective whole!

BullsEyeAka-Kent
BullsEyeAka-Kent

The only questions that these reports raise is: why people continue to believe that Leftist, Liberal policies work.

You can't tax and spend the country to prosperity.  That America needs LESS Government not more.  That raising the minimum wage hurts the poor and kills jobs, not the other way around.  

The major question it raises to me is why do you continue to report 'spin' instead of facts?  Demand the Government give us the raw numbers not 'Seasonal Adjusted' numbers.  

mantisdragon91
mantisdragon91

How 40 Years of Union-Busting Has Failed America

Henry Blodget says he hates labor unions, but unless companies start raising wages we're going to need them.

I would put this another way around. If you turn back the 30 or 40 years, the policy rationale for crushing labor union influence went something like this: In the short-term crushing private sector labor unions is going to lead to a surge in corporate profits, but profits are the fuel of investment and long-term economic growth. Companies with high profits have the capital necessary to invest. And the existence of large profit margins means there are profit opportunities to be exploited with new investment. It makes perfect sense. But it hasn't happened, and profits have soared far in excess of investment.

You can look at this in different ways, but here's corporate profits after tax minus net private investment:

Which is to say that several decades into this experiment we're seeing much more of the "profits surge" than the "surging profits lead to an investment boom" dynamic. One explanation for this that's growing in popularity on the right is that the rise of more capital friendly politics in the mid-1970s coincidentally occurred at the exact same time as a structural slowdown in the rate of technological progress, so while it seems like anti-labor politics has failed to deliver the goods it's really all just a stroke of bad luck.

And maybe that's right—just because an unfalifiable proposition seems conveniently conducive to the interests of very rich people doesn't mean it's false. But it sure seems false to me.

Now of course the policy world isn't binary. Just because something has failed doesn't mean the only way to fix things is to simply reverse the thing that failed. Possibly the right remedy to this is to change labor law. Possible the right remedy is to change corporate governance. Possibly the right remedy is to engineer a public sector investment boom. Maybe some of the sources of these profits need to be attacked directly. Maybe it's all of them. But however you slice it the striking issue isn't simply the structural growth of profits in a low wage environment, it's that the business-friendly environment isn't bringing us the investment utopia we were promised.

ViableOp
ViableOp

Here is a look at what has happened to median American wage income since the Great Recession:

http://viableopposition.blogspot.ca/2013/08/producing-more-and-earning-less.html

While jobs are being created in the United States, unemployment is falling and productivity is up, many Americans are finding themselves falling further and further behind…unless they have the good fortune of spending their working hours in an upper floor corner office.

Galen
Galen

@BullsEyeAka-Kent 

You mean those leftist policies that had to pull us out of another GOP adm meltdown, THOSE!? Great Depression, Great Recession and Reaganomics S&L crash. Did you mean those??????????????????

The socialist leftist always get blamed for raising taxes, when that is the only choice when the continued government hating conservatives fail to govern and drive our country off the fiscal cliff. No one in history has created more big government then Reagan and Bush.

Your so-called facts of loonyism, come from the fair and balanced network of spin and lies, and thats what Ailes us!!

Got more questions??

tom.litton
tom.litton

@BullsEyeAka-Kent Taxing people that don't spend money and giving it to people that do in an economy that lacks demand, will obviously lead to more prosperity.  You may object to it on moral grounds, and doing it far too much will have it's on consequences, but economically it's a no brainer. 

 If you read the economic studies around raising the min wage, you will find that they range from costing a few jobs to increasing by a few jobs. My guess is that employment will be slightly less, but a lot of people will depend on government handouts a lot less.


The reason why the raw numbers aren't reported is because they are not as meaningful.  There is a large variation on hiring between winter and summer.  If you don't adjust for that, you really can't tell if the jobs market is getting better or worse.  I'm sure you can find the raw numbers if you care to look for them.

Galen
Galen

@mantisdragon91 

exactly!

the bigger over all failure, is conservative adms, and the parties loud selling of lies for years.

BullsEyeAka-Kent
BullsEyeAka-Kent

@Galen As a small businenss owner, I understand that increasing minimum wages cause my employees to come and ask for raises.  That as the minimum wage increases my costs in Federal and State taxes increase.  As a consumer, I understand that a raise in the minimum wages cause ALL prices to increase to cover the additional costs of business.  

If you believe Tax and spend works then I'd suggest you think about your own back account and see how well spending more money than you make for 40 years will work for you or your business.  The FACTS are pretty simple to comprehend, the only question I have is why Liberals can't comprehend Facts and Logic.  

You can spew your hate at me all you want but it doesn't change facts.  Government, regardless of Republican or Democrat, cannot spend its way to the public's prosperity.


BullsEyeAka-Kent
BullsEyeAka-Kent

@tom.litton @BullsEyeAka-Kent 
Really Tom so taxing people that live within  their means and save money to give to people who spend more than they make leads to prosperity?  Then I'll tell you what lets skip the middle man and just mail me 20% of your pay every month and I'll spend it.  The facts are that 50% of Americans pay NO income tax.  The top 10% of income earners pay 70% of the taxes.  
 If your theory worked we should be prosperous already.   Raising taxes on the Rich won't solve our problems.  You can't continue to spend  more and more and more and expect businesses to continue to grow.   You can't expect 50% of the population to 'produce' nothing and expect to have a prosperous society.

And the 'Seasonally Adjusted" numbers are not adjusted based on  'Seasons' they are adjusted based on the number of companies that are 'born' and "die" in that month 1 year ago.  So it really has no impact on this years data.  They are adjusted to hide the real data.  This has been going on since the depression.  It was a way to hide how bad things really were.  

Additionally, to say the raw numbers are not as meaningful, implies YOU are not smart enough to think for yourself.  I can think, I can apply logic and  reason.  I can handle the raw numbers.  Just because you or anyone else can't doesn't mean that both sets of numbers can't be reported.

BullsEyeAka-Kent
BullsEyeAka-Kent

@Galen @BullsEyeAka-Kent Right because Obama, Pelosi and Reid have did such a great job when they had all the power.

The House and the Senate control spending not the President.  Look and see who spent the money under Reagan, Bush, Clinton and Obama.  I will admit that W. Bush and the Republicans spent like Democrats.  They wasted a great opportunity to fix some of our problems.

Unfortunately, most politicians are simply ther

BullsEyeAka-Kent
BullsEyeAka-Kent

@Galen @BullsEyeAka-Kent Right because Obama, Pelosi and Reid did such a fine job when they had all the power.  Again, spew all the hate you want Galen.

Raising the minimum wage does nothing for employee moral.  Minimum wage jobs are minimum wage for a reason.  They are not suppose to be career jobs. 

Presidents do not control spending.  They simple suggest budgets and the 

BullsEyeAka-Kent
BullsEyeAka-Kent

@SukeMadiq @BullsEyeAka-Kent @Galen Actually it does because as you artificially raise the bottom wage you also artificially raise all wages  and thus artificially raise payroll, Social Security and all the other employer contribution taxes.

SukeMadiq
SukeMadiq

@BullsEyeAka-Kent @Galen

Again you are wrong, did you go to college at all? The minimum wage has nothing to do with taxes.   The cost will be shared by consumers of the businesses affected and the owners of those businesses in reduced profits
.Very few businesses pay minimum wages at all.

Galen
Galen

@BullsEyeAka-Kent @Galen 

I am also a small business owner.

If you are so concerned about tax a spend policies, why do you vote for attempts at supply side, NO-trickle policies?? If this is really a concern, why do people like you vote for Reagan and Bush, two huge spenders !? Reagan had to raise taxes all over the place the his last two years to pay for his tax cuts and Reaganomics, as our debt exploded under him, not to mention, his policies created the S&L crash a few years latter under Bush I. Dems always get blamed for raising taxes and what you liars never make clear is, they are taking over GOP adms messes... great depression, recession and Reagonimics.

To give people a better LIVING wage, produces more consumption and you sell more product and have happier employees who work harder. 

Get a grip, you are part of the problem!

BullsEyeAka-Kent
BullsEyeAka-Kent

@SukeMadiq The 'Seasonal Adjustments' are not based on seasons.  http://stats.bls.gov/web/empsit/cesbd.htm  Your thinking of the unemployment rate which is calculated in a totally different way that the employment report.  Visit the Bureau of Labor Statistics site above to see how the employment report is adjusted.  It's adjusted based on the number of businesses that are 'born' and that 'Die'.  So of the 166k 'new' jobs created in June 343k of those jobs were adjustments.  So do the math 343 - 166 = a net lose of 177k jobs.

The unemployment rate is 'seasonally adjusted' as described here: http://www.bls.gov/cps/documentation.htm

SukeMadiq
SukeMadiq


It sounds like you don't understand, some season like winter have far more unemployed people then in the fall when crops are harvested or in the summer when kids seek full time work.  The adjusted rated compensate for these fluctuations or the unemployment rates would vary wildly based on seasons.

SukeMadiq
SukeMadiq

@BullsEyeAka-Kent @tom.litton

The top 10% of income earners pay 70% of the taxes
________________________


Under Paul Ryan's plan Mitt Romney would have paid a rate of less than 1% tax on 30 million a year income!

SukeMadiq
SukeMadiq

@BullsEyeAka-Kent @tom.litton

that 50% of Americans pay NO income tax.

___________________________________________


Yes mostly elderly, disabled, and the working poor including active Military people!




The top 10% of income earners pay 70% of the taxes

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On 90% plus of the wealth!