Reading the Employment Report: Focus on Hours, Not Heads

The latest employment numbers are out, and they are dreadful. Those commentators who saw “green shoots” out there had been focusing on the fact that in May, the economy “only” shed 322,000 jobs, which is good news when compared with the fact that the economy had been losing over 600,000 jobs per month in January, February, and March. Squint hard enough at the black line in my chart, and you can see why many were hopeful that job losses were slowing down.

But counting the number of people who lost their jobs misses an important part of the story. Focus instead on the purple line, which is the index of aggregate weekly hours worked and also counts those who’ve lost only part of their jobs. The decline in aggregate hours worked has been frighteningly consistent over recent months. Any evidence of “green shoots” appearing in recent months disappears in this broader measure. The recession continues apace. If current trends continue, we are in for a frightening time.

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It’s time to start talking about a second fiscal stimulus.

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  1. David says:

    A second stimulus? I didn’t even know money from the first had been released.

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  2. Colin says:

    It’s time to start talking about a second fiscal stimulus.

    Sounds good. Since the big government approach isn’t working, how about the second stimulus be based on free market approaches like deregulation and tax cuts?

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  3. Jonathan S says:

    “It’s time to start talking about a second fiscal stimulus.”

    The first trillion dollars didn’t do much, why should we bankrupt our grandkids even more?

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  4. iratecat says:

    Why doesn’t it count farm workers?

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  5. SpecialK says:

    The first pork-laden $3,270,000,000,000.00 (as calculated by CBO over first 10 years) stimulus was so wildly successful we have to start talking about a second one? So soon?

    The Obama administration has already admitted it was dead wrong about the effects of the first stimulus by at least 2% more unemployment by the end of this year. Where are all those multipliers we were promised? But the second stimulus will work for sure, right?

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  6. Andy Feldman says:

    It’s time to start realizing that consumption-stimulus doesn’t help the economy. That’s the evidence most people would draw from that graph. Savings, not consumption, is what drives real, permanent growth. We’ve become addicted to borrowing, and more stimulus is like taking another hit to stave off your withdrawal symptoms. Does that really sound like a good idea to anyone?

    We’re in this mess because of the persistent low (or even negative) savings rates over the past decade or more. Consumption was above normal as we borrowed and spent, and now it’ll be below for a while as we pay it back. There’s really nothing surprising about this, and there’s no magic fix.

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  7. frankenduf says:

    i totally agree that a second stimulus is needed (read as critique- first one wasn’t aggressive enough)- as to the “green shoots”, that’s regression back to wall-street-speak- wall street profits are back to record ’07 levels- that finance profiteering will continue as before is the (money) green shoot that the finance industry wants to confuse as a good sign for all

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  8. Caliphilosopher says:

    “how about the second stimulus be based on free market approaches like deregulation and tax cuts?”

    I’m pretty sure that deregulation got us into this mess. And cut taxes for who? All those people who have lost their jobs?

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