The September Jobs report finally came out after being delayed by the shutdown. Any way you look at it, a longer delay would have been better. According to the official Bureau of Labor Statistics (BLS) figures, the economy only added 148k jobs in September.
But there’s a lot more to it this time around lurking behind the scenes. The markets largely shrugged off the bad news and most of the reporting on the event was dismissive. It’s almost as though the anticipation was bigger than the event – like a disappointing Christmas (whoops! Can’t say that ‘round here!). Is it possible that financial reporting is starting to wake up?
Big companies have been slow to hire, slow to increase hours
Before we get into the spin, there are the numbers. Markets expected a gain of around 180k jobs, or at least something more on the order of the 166k reported by ADP earlier in the month. When that didn’t happen, the markets went up anyway. Once again, bad news is good news because it keeps the Fed’s Magic Money Machine buying mortgage backed bonds.
For our purposes, we finally learned that the gap between “headline” unemployment, or what the BLS called “U3”, and unemployment among 20-24 year olds has indeed closed a touch to 5.7%. Young people still have a shocking 12.9% unemployment rate, but it’s down from 13.7% at the start of the year. And this is the first strange thing that is starting to resonate in the press after a long wait.
Try anything. It’s bad out there.
Young people are not entering the workforce as they did in previous generations, largely due to this terrible unemployment figure. Remember that official “unemployment” only counts people who want a job – so kids who are in college are not counted as being part of the “workforce”. They’re staying in school longer in part because they can only afford so many credits at a time in order to avoid big debts, but also because they are getting advanced degrees.
Given that a full 41% of the workforce is over 55 years old, according to the BLS, when the big wave of Baby Boomer retirement hits starting around 2017, the kids that will enter the workforce then will be very well educated. They will also have lower expectations, given how rough things have been for them lately. Predicting a coming “Golden Age” after the year 2017 is getting easier all the time.
But the jobs report itself is coming under increasing scrutiny, too. The fact that it bounces around like crazy is starting to register, although the press is not particularly interested in why this is the case. Barataria has speculated that the reason is contained in the less respected but far more stable ADP report, which shows that job growth is coming almost exclusively with small businesses of less than 20 employees. The BLS survey method probably has trouble finding them in any given month.
Small businesses have been hiring much more rapidly
For now, the extra wait for the disappointing report has created more of a shrug than curiosity. But the story of a restructuring economy is still out there.
The press’ souring on this report doesn’t stop there, however. According to a Goldman Sachs survey, more than 40% of Americans cut spending during the government shutdown. Data compiled before October is already old news. Between the shutdown and the gear up for the Holiday Season the jobs reports have already been labeled “meaningless”. It’s sad but true – we can’t tell much from them, at least not without comparing them to what was happening a year ago.
Barataria readers have already seen a comparison between the 2012 Holiday Season and the predictions for this year, which are all over the map. This gives us a baseline to continue evaluating jobs reports even if the mainstream press would rather throw up their hands and call them “worthless”. It’s an attempt to get past the problem that does appear obvious.
What can we say about this delayed September report? As always, the BLS report is more of a confirmation to those of us who find the ADP report more compelling, even if it does provide more and different data. Where it gets interesting is how the camp followers that used to traipse after each month of data somehow got their bad habits broken by the shutdown delay. Perhaps something good came of the shutdown after all?
(no, not really)
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If the report is flawed than what’s the problem? You’ve said that they make too much of this so I don’t really get your point. If its to brag that the MSM is coming around to your view than that’s OK but I think you meant something more.
Yes, a little bragging. 🙂 But mostly that this is going to change how we talk about jobs in the future, and the press is apparently going to be less reliant on the BLS report. That’s a good thing, but what is going to replace it?
I hope they do more reporting on their own – that’s something I can’t do from here. Interviews with employers and employees, things like that. Perhaps some groups will come up with their own surveys or rely more on ADP or Challenger Gray & Christmas who do their own reports.
Yes, I did complain a lot when the Fed extended their bond buying program and the weak August jobs report was given as a reason – that was totally uncalled for. But that was different – Bernanke himself made no reference to it and even said that jobs were moving ahead about as well as they could expect.
People are rightly skeptical about all this. They say the unemployment rate went down but that was because “fewer people are looking” or some nonsense. Just because people gave up doesn’t mean that they aren’t unemployed.
I should always mention the broader measure of under/unemployment, U6, when I discuss the jobs reports. Details as to what it means compared to the “headline” unemployment number, U3, can be found here.
The headline number ticked down in September from 7.3% to 7.2%, which is a good change from Sept 2012’s 7.8%. But we can’t say that it came from “discouraged workers” leaving the labor force (the fancy term for what you described).
The broadest measure, U6, went from 13.7% in August to 13.6% in September, a good improvement over Sept 2012’s 14.7%. That means that taking into account the increase in the labor force (it will keep growing for another few years until Boomers start to retire in large numbers) there was a net gain of 1.5M more people working full time. That’s not bad – even if we really do need a lot more than that.
It’s good to watch the “alternative measures” the BLS puts out. They don’t get anywhere near enough cred for U6:
http://www.bls.gov/news.release/empsit.t15.htm
This is going to sound like a school assignment, Erik.
1)Write an expository essay explaining the concept of economic restructuring that has occurred since the start of the great recession. The body of your essay should be three companies or organizations that are doing something different that illustrates your concept of restructuring.
2) Make sure to provide sources, other than your own previous blogs that back up the body paragraphs.
3) In the closing paragraph give the reader an estimate of the additional jobs added to the economy as a result your restructuring examples.
This is what I got for you in a short time:
Ford went through a restructuring to be a more global company and streamline its supply chain:
http://online.wsj.com/news/articles/SB124199912671905001
Gap responded to weak sales by moving both online and more global at the same time:
http://www.bizjournals.com/sanfrancisco/news/2012/10/16/gap-undergoes-major-restructuring.html?page=all
Kodak hopes to emerge from BK as a research and printing company, which I really don’t get, but whatever:
http://www.semissourian.com/story/2001667.html
Finally, this thing from Deloitte on their services to help restructuring shows what a trend it is:
http://www.deloitte.com/view/en_us/us/6bdb27512a4fc210VgnVCM1000001a56f00aRCRD.htm
I don’t have time to take up your challenge right now, but this has a lot to do with why big companies aren’t hiring right now – many are restructuring internally and working out what they need. But profits are up, so as they discover what works I believe they will hire more (note: that should have started by now, so my timing is not good).
But part of the trend is toward contracting out a lot of stuff, which is why more than 40% of the new jobs created since the low point in 2010 are at companies of less than 20 employees. Our whole idea of a “corporation” is changing – and I want to find a good article on that (later).
October 31 is approaching and I’d like to salute Michael Collins. astronaut of Apollo 11. That is his birthdate and he will be 82. Space exploration continues to inspire children of all ages.
“We came in peace for all mankind. July 1969.”
We like to think our times are divisive, but it is instructive to remember that the Vietnam War was going on at the time.
I’ll give that an “Amen”. I would like to do something like that again, yes.
Erik, thank you for your reply above. You went the extra inning and I appreciate it. I will read all the links!
No problem, you asked for something I have been thinking about doing lately … I really want to put together a short eBook on this stuff so that it’s in a logical order (and I can make a few bucks). 🙂
I wonder if the data is looking good enough that the finance reporters want to poo-poo it to make things sound worse than they are. They all want the Fed to keep buying bonds & they all don’t like Obama.
It is possible. Financial reporters are pretty biased in favor of anything that makes the stock market more interesting (ie, more lucrative). I will think about this. There is a lot more room for opinion in financial reporting – if anything, it is encouraged in many places.
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