Monthly Jobs Numbers Don’t Matter
Today’s anemic data is just political football in a predetermined game. By Zachary Karabell.
Today’s anemic jobs report is yet another indication that the unemployment picture in the United States is getting neither better nor worse. It is also yet another piece of evidence that there is a chronic, long-term structural employment issue in America. It is not an acute crisis; it isn’t getting much worse; and it isn’t going away anytime soon.
According to the Bureau of Labor Statistics, 115,000 jobs were added in April, and the official unemployment rate declined a shade, to 8.1 percent from 8.2 percent. More than 5 million people have been unemployed for more than six months—half of all those without jobs—which is about the same as it has been for some time. In most key respects, the numbers were little changed from a month ago, which were in turn little changed from the month before that. If you read through the government’s release, you will find the phrase “little changed” repeated multiple times.
This report, along with the past few, will do nothing to dispel the debate over the statistical construct known as the U.S. economy. Along with other statistics that dot the economic landscape like so many points of light in the sky, the unemployment report is the perfect Rorschach test. Those feeling more upbeat can see in the numbers just enough reason for hope—the economy did add jobs, manufacturing is gaining ground, the workforce is no longer contracting, earnings are crawling up. Those feeling more grim can read in the numbers just enough evidence for pessimism—the rate of job creation has slowed noticeably in the past two months, wages are stagnant even as inflation is not, the workforce is not expanding, and there is a chronic problem of long-term unemployment and underemployment affecting many, many millions.
Of course, any one month can’t be judged in isolation. These numbers are the product of calculations and adjustments, not simply a raw count. Hence the analysis by those in the know that some of the strong job gains from December through February were the product of “seasonal factors,” either holiday retail sales hiring or statistical adjustments for normal winter patterns. Take those away, and there are fewer jobs created, statistically speaking.
Still, like shadows on a cave wall, these reports do give picture of general trends, and this trend is decidedly static. That isn’t bad news per se, but it cuts against the ingrained belief that the employment problem is a legacy of the recent financial crisis and recession. Not so. The landscape of jobs in the United States is in the midst of a multidecade transition, which the mid-2000s housing bubble helped obscure with easy credit and construction- and housing-related jobs. The move away from manufacturing and associated jobs has been going on for decades, and gathering steam in this new millennium. Even as manufacturing output rebounds, it remains an employment shadow of its former self because of robotics and technology and just-in-time, flexible floor plants that require highly skilled workers. Those workers are not in ample supply, and that is why the only substantial job creation has been in less-well-paid service jobs ranging from orderlies to waitresses.
In short, we have a workforce with a large number of people (perhaps a quarter of the working population) either not working or earning barely enough to meet basic needs. Economic growth of 2.5 percent a year, or 3.5 percent a year or more, isn’t going to magically change that reality. Companies can and are earning billions with trim workforces, because they don’t need more bodies to make what they make or provide what they provide. Many companies can’t find people with the skills required, even as tens of millions work at subpar jobs or seek better ones or have none at all. Again, no realistic level of overall economic growth is likely to change that.
Such a picture flies in the face of a political and economic creed that the jobs issue is a cyclical problem stemming from the financial crisis and made better or worse by government policies. The problem is that government policies have defined the jobs issue as a cyclical one, just as most jobs issues were from the Great Depression through 2001. The election season is full of claims and accusations about what government has done to bolster employment or create a crisis. It isn’t full of any recognition that the transformation of the American workforce has been happening longer than the past four years and is likely to continue for many more. Government could play a constructive role in easing the pain of that transition, but only if the core problem were correctly identified.
But in this political season, the monthly jobs data has become just so much political football in a predetermined game. There will be little discussion of the structural issues and what we can collectively do, other than hints about job training and education. That denial may serve the election cycle, but it leaves us all ill-served and ill-equipped to address one of the most pressing issues of our day: the generational transformation of an economic system empowered and imperiled by new technologies, successive waves of globalization, and the question of growth in the United States, Europe and the old centers of the last century in the face of the new emerging powers of the current century.