Friday, May 3, 2013

April Numbers More Sluggish Than March

Photograph copyright 2013 by P-G Matuszak. All rights reserved.

Many myopic Keynesian economists lauded March's drop in unemployment when it fell to a still dismal 7.6% U3 figure.

The US Bureau of Labor Statistics calculated April U3 unemployment at 7.5%.

However, the tenth of a percent drop is not the good news some may wish you to believe.

The workforce participation rate also fell slightly; but not enough to adjust it down a full tenth of a point. It remains reported at 63.3%. Only about 58% of the US population is considered of "working age". Of that, only 63.3% of the people are considered to be willing and capable of work. That means only 63.3% of 58.6% of the population has a job or has looked for one in the past 4 weeks. That means only 37.1% of  the total population is considered part of the workforce. 7.5% of them are unemployed, but looking for work. That means 34.3% of the US population is supporting 65.7%.

To see how that translates to "real unemployment", compare last month's numbers as reported versus if the WPR was the same today as it was in December 2008. 

That is diametrically opposed to the American Dream of self-sufficiency, independence, and reaping what one sows.

That is not the worst news. The worst news is that the down-tick in U3 unemployment translates to an uptick in U6 unemployment. It jumped dramatically from 12.5% to 13.9%.

Average work hours dropped .2 hours a week to 34.4. That is just 4.4 hours over the full-time threshold of 30 hours.

Most of the 165,000 "jobs created" were part-time jobs. Due to the taxes created by the PPACA, also known as "Obamacare", many small businesses, retail stores, and food service companies reduced employee hours to less than 30 per week. To cover operating hours, they hired part-time people to work 15-20 hours per week. That caused the U3 unemployment to drop. However, it means people are working fewer hours per week.

To make those numbers worse, 31,000 of those "jobs created" were temporary jobs. Many such jobs last less than 90 days. They are not "permanent" or "long-term" employment. 

The average hourly wage dropped as well.

So, people are working fewer hours. Companies are cutting full-time positions to part-time. For every two positions cut to less than 30 hours, they are hiring another, at less than full-time. Those returning to work are making less an hour at part-time jobs. Those formerly in full-time positions are working fewer hours.

The formula produces a result of what Jimmy Carter called "malaise". When people consider inflation, increasing food costs, increasing fuel costs, and increasing health care costs, the result is anything but prosperity.

Under the current administration's promise of a "workers' paradise", the WPR should be higher than it was December 2008. Instead, it's lower. If the WPR was the same (not higher as promised) as December 2008 (65.8%), this is what the U3 and U6 numbers would look like today:

U3 unemployment -- 11.0%
U6 unemployment -- 15.9%
"real unemployment" (includes "marginally attached" who have searched for employment during the past 52 weeks.) -- 17.1%