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10.22.13

A Few Good Bits in a Pretty Bad Jobs Report

Today’s delayed employment report wasn’t very good, but it had some glimmers of hope. Daniel Gross on the signs that the forces holding down job growth are beginning to lift.

In the old days, the personal was the political. These days, the personal finance is the political as government policies, Washington dysfunction, and brinkmanship wreak havoc on the markets and the economy.

The government’s heavy hand has been visible in the monthly jobs report for the last several years. On the left, analysts have generally pointed to the Bureau of Labor Statistics release and noted that austerity—reduced government spending at the state, federal, and local level—is tamping down employment. On the right, analysts have combed through the same report to find evidence that regulation and the advent of the Affordable Care Act are pushing more Americans into part-time work.

In the ultimate sign of D.C.-induced economic dislocation, the September jobs report, which was supposed to be released on the first Friday in October, was delayed due to the shutdown. It was released Tuesday morning. And, ironically, the post-shutdown jobs report showed that the two big political talking points surrounding the jobs report are becoming inoperative.

First, the basics. The government reported that in September, as businesses nervously cast their eyes to the Beltway, the economy didn’t add many jobs. According to the establishment survey, in which companies are asked how many people are on their payrolls, 148,000 new positions were added, which is pretty lame and significantly lower than the pace to which the economy has become accustomed. The unemployment rate, which is determined by the household survey, in which individuals are asked about their working status, fell to 7.2 percent. The workforce grew in September from August, but the number of people reporting themselves as working rose by a slightly higher margin. All in, a very meh report.

But there were two interesting tidbits. For years, we’ve had what I’ve dubbed the +“conservative recovery.” Every month since February 2010, the private sector has added jobs—about 7.5 million in total. And virtually every month since May 2010, the public sector—state, local, and federal government—has cut jobs. That does not typically happen in a normal recovery. Thanks to austerity, about one million government positions have vanished, many of them at the state and local level. In Washington, the furloughs, the sequester, and the general drive for lower spending has helped keep a lid on federal employment. In September, the federal government cut 6,000 positions. It has reduced employment by 87,000 job in the past year.

But at the state and local level, something is beginning to change. We’ve noted that the fiscal picture in states and cities has been brightening. Thanks to tax increases, reforms, and economic growth, state revenues have risen for 12 straight quarters. And dozens of states, many of which cut jobs to close their annual deficits, are now reporting surpluses. As a result, state, cities, and counties are finding they are able to hire or re-hire, teachers, police officers, and other workers. In September, state governments added 22,000 positions while local government added 6,000 posts. State governments have added jobs for two straight months—33,000 in August and September. And local governments have added jobs for six straight months—74,000 since February. Local governments actually employed 43,000 more people in September 2013 than they did in 2012. That’s an important shift.

Thanks to austerity, about one million government positions have vanished, many of them at the state and local level.

The data also revealed another interesting trend. For months, conservative analysts have been decrying the fact that a great deal of private-sector job growth seems to come in the form of part-time jobs. The supposed culprit is obvious: Obamacare (which forces companies that employ people for more than 30 hours per week to offer them health care), and the Obama administration generally. But the data in today’s report shatter upends that talking point. As Michael Strain of the American Enterprise Institute notes, the number of people who report themselves as working part-time “for economic reasons”—i.e. they’d rather be working full-time, but aren’t because their employer won’t give them the hours—has actually fallen in the past few months and in the past year. In September, some 7.926 million Americans fell into this category. That’s down from 8.226 million in July, and down from 8.607 million in September 2012. That’s a decline of 681,000, or 8.5 percent, in the past 12 months. If employers were cutting people from full-time to part-time status in anticipation of the Affordable Care Act, that number would be going up, not down. While the figure of Americans working part-time for economic reasons is elevated compared with the height of the last expansions, it’s actually below where it was in January 2009, and is well off the September 2010 peak of 9.226 million.

The jobs report wasn’t good by any stretch of the imagination. And the labor market is still in a relatively deep funk. But there are glimmers that some of the weights holding down job growth are lifting.