Radio commentary, April 1, 2010
First, a few words on the U.S. employment report for March, released on Friday morning. While the headline job gain of 162,000 looked pretty decent, especially after the huge declines of 2008 and early 2009, 30% of the gain came from temporary workers hired to conduct the Census, and another 25% came from temp firms in the private sector. So more than half the gain was in jobs designed not to last.
There were a few bright spots. Manufacturing added 17,000 workers, its third consecutive monthly gain—a sterling performance for a sector that lost jobs for 35 months in a row, and was in its own private recession for a dozen years. Manufacturing employment is now below where it was in 1941—not as a percentage of the total workforce, but in absolute numbers, a period when overall employment nearly quadrupled. (Manufacturing was over 30% of total employment then; now, it’s 9%.) Employment in bars and restaurants also grew, good news for the sybarites among us.
The unemployment rate held steady at a very high 9.7%, and the broadest measure of joblessness, the so-called U-6 rate, which takes account of people working part time who want full time work but can’t find it as well as those who’ve given up the job search as hopeless, rose 0.1 point to 16.8%, an extremely high number. The probability of a person unemployed in February finding a job in March fell below 20%, to an all-time low (and these numbers, using a technique borrowed from the economist Robert Shimer, go back to 1948).
Average earnings fell by 0.1%, before adjusting for inflation. Declines in wages are very rare, so despite the vaguely improving tone of the employment stats, the labor market continues to be very weak.
We’re in a deep hole, and it’s going to take a long time to get out of it.
backward glance: employment reality check
And now a bit of statistical arcana. As I point out here from time to time, the monthly employment numbers are based on a survey of employers. It’s a very large effort, about 300,000 establishments, but as with any survey, it’s necessarily incomplete. It covers only about a quarter of the places that people work. You couldn’t canvass the entire universe of employers every month and get the data out with anything approaching timeliness. So the government statisticians—who, I can’t say too many times, are extremely competent and dedicated people, the slurs of conspiracy theorists to the contrary—do their best to turn the survey into an estimate of what’s going on throughout the U.S. economy. Most of the time, the survey is a pretty good. But it’s not good at times of rapid change.
The estimates are reguarly corrected by comparing them to the near-complete coverage of the employment universe, about 99% complete, provided by the unemployment insurance system. Once a year, the Bureau of Labor Statistics makes what are called benchmark revisions, that align the monthly estimates with results of the full coverage. And those yearly exercises are supplemented with quarterly releases from the same source—though a delay of about six months. Six months would be too long to wait for monthly employment numbers, but the quarterly audits provide an excellent reality check.
As I said, most of the time, the monthly survey is pretty close, within a tenth of a percentage point or two, of the full-coverage numbers. But things have been very out of whack in this recession. On Thursday morning, the BLS reported that the employment picture last September was even worse than we realized. The regular monthly numbers told us that 6.4 million jobs were lost between September 2008 and September 2009. The full-coverage version now tells us that the true loss was 7.1 million. Things looked pretty bad before; now they look even worse.
All signs are that the job market is beginning to improve, as the March figures showed. But, like I said, we’re in a deep hole—and now we know it’s an even deeper hole than we thought—and it’s going to take a very long time to climb out of this one. Further evidence of why we need a jobs program, which our president and Congress aren’t about to give us.
Oh, but 2009 was a great year for the masters of the universe! The top 25 hedge fund managers pulled in an average of $1 billion last year. The man at the very top, David Tepper, took home $4 billion. Next up was that great liberal humanist, George Soros, at $3.3 billion. The poor relation at #10, Philip Falcone, hauled in $825 million. The $25 billion that this gang collectively earned would be enough to pay the tuition for about one in five college and university students in the USA. That’s only a hair less what the federal government pays in tuition assistance. Twenty-five guys (all men, by the way). What a country.