Worried About the Latest Jobs Report? You Should Be


The latest employment numbers have already caused plenty of consternation. But they are actually worse than you may realize.

Most attention focuses just on the headline number, which says that only 18,000 new jobs were created last month. But the employment report actually contains many indicators, which rarely line up perfectly. The problem is that this time they do.  There are three independent samples to consider:

–          The main establishment survey:  This says that growth in employment has stalled. Moreover, wages fell slightly, and the workweek is falling. All indicators in this survey point to bad news. Hence this morning’s headlines.

–          The revisions: Some firms are late to send in their employment numbers each month. They’ve finally sent them in for May, which was an ugly jobs report to begin with. But the revision is downright hideous. Instead of growth of +54,000 in May, the BLS is now reporting growth of +25,000 jobs. Employment growth in April was also revised down.

–          The household survey: Which tells an even worse story, with employment falling 445,000 last month. These data are noisier, to be sure, but they are still informative, and they suggest that the true employment picture may be worse still.  And there’s more bad news: The ranks of the long-term unemployed are rising, as are the ranks of the under-employed.

Bottom line: If the headline numbers have you worried, you aren’t worried enough. Each of the three separate data collections gives a consistent picture of a very grim labor market. This payrolls report will (and should) have a bigger impact than usual, because it tells a much clearer picture than usual.


Wow... istock photo is a little harsh huh? Not very sensitive to the fact that people have already killed themselves, their families and their coworkers over losing their jobs.


Is it possible to talk about the numbers of unfilled jobs in the United States? Is it possible to talk about the reticence of people to move to where there are jobs? No doubt that there are millions of unemployed people in the United States. We need to turn this dialogue into something constructive, and look at employment in the United States from all facets.

We need to ask ourselves: what skills do these unemployed people have? Where do they live? How positions similar to their skill sets exist? Can they move to find work? Will they move to find work?

The same thing with Housing. For nearly 10 years, the Housing Market was over-expanding, and building beyond capacity, really. Homebuyers bought houses they could not afford simply to leverage themselves into another house they couldn't afford. Now, they are in debt, or financially strapped. The Housing Market is down because people and mortgage companies, and investment houses leveraged too much money; now there is less money to push into Housing.

Could someone please discuss these economic issues in the greater scheme of things rather than simply harping on unemployment and a down housing market.



I agree that a bit more discussion of the issues would be nice, but just posting this news is nice as well. I hadn't noticed the household survey, and I appreciate the Freak crew bringing it to my attention.


bottom line: if public policy makers wont effect employment stimulus, then their negligence will be be remembered by history (see great depression policy analysis)

Joshua Northey

One major thing to fix this type of problem is to maximize labor market liquidity.

Put a lot of resources into training/retraining
Subsidize relocation.
Meter the average work week to demand.
Most importantly making sure do work that is actually productive (paying people to dig and fill in holes will just make it worse in the long run).

It also really wouldn't hurt if we could scale back our debt ridden consumer culture so the unemployed are not so tied to a standard of living. A lot of people would be perfectly able to find a job if they were willing to take a 30% paycut, but they feel they cannot because they have a list of payments to meet and it is so hard to break back up to higher pay.

Marcus Kalka

Yes! The issues you brought up need to be thrown into the discussion sooner than later. Training and retraining must be high priorities and we have to make sure people are doing work that is actually productive. I want to say that the government should take a step back and let the market do its thing, but at this point letting-the-market-do-its-own-thing may not be for the best in the short term and we probably wouldn't be able to do some of the actions you suggest without government intervention.

This issue is clearly moving from being an economic/political issue into being a more overarching cultural issue. The market is telling us something about our way of life.


Isn't this something Keynes would have predicted given the current situation? We have an excess of supply - actually supply capacity. Demand is off. Businessmen are smarter than politicians - when they have an excess of capacity they don't make any more. Until we find a way to stimulate demand, there will be no more hiring. And the only ways I can think of to stimulate demand are to stimulate exports by making American goods cheaper (inflation will work to do this much quicker than increasing the value of those goods), making foreign goods more expensive (with all the attendant problems of tariffs) or to make sure people - consumers, not the rich - have more money to spend. If you give the money to the rich, they'll save it or invest it, likely not in investments that create jobs. If you give it to the middle class and below, they'll spend it, stimulating the economy. In fact, there's likely so much extra capacity at the top, so much investment capital available up there in the upper 1% that if you were to decrease the amount of money they had, there'd likely be little overall impact to the economy.


Dave H

"If you give the money to the rich, they’ll save it or invest it, likely not in investments that create jobs."

This is obviously something some college professor taught you, because it has no relation to actual reality. Do you even know what "saving" is? (Hint: it's a form of investment, because the bank you save it at invests it by lending it to businesses, which can use it to create more jobs.)

Companies are making money (see DJIA), but they are not investing it to create new jobs because the hyperregulatory ObamaState (PPACA, Dodd-Frank, EPA, NLRB) has created too much uncertainty and uncertainty is kryptonite to the investment needed to create jobs.

If you just give all consumers an extra $1000, all you do is raise the price (not the value) of their total consumption by $1000 - i.e., you spur inflation, not demand.

Unlearn your college economics and pay attention to the real world.



Is there any way to tell from these numbers the effects of state and local governments cutting back? I know that teachers, for instance, are being furloughed all across the country. I'm not sure at what point they can collect, though I imagine they may have to file as soon as they know they are furloughed, even if they aren't paid until the school year would begin?

When governments tighten belts, jobs are lost as well.

Curmudgeon Killjoy

Keynesianism is the Alchemy of our time. Keynes, and his disciples, Krugman and Stiglitz posit that inflation, a weak dollar, and huge deficits are the current keys to full employment and prosperity. Alchemists had a better chance of turning lead into gold that these policies have creating prosperity.

In The General Theory, Keynes urges policymakers to deliberately cause inflation in order to reduce real wages across the board. By reducing real wages – i.e., the standard of living of those who are working – Keynes’ theory goes, the government can lower the real cost to employ labor and, in so doing, increase demand for labor, and move the labor market toward full employment. Lowering the real wages of those already working does not create room to hire the unemployed; it is self defeating because the decline in real wages for the working lowers their purchasing power and reduces real demand.

But, do you really believe inflation creates jobs? Keynes believed this because workers prefer losing purchasing power to inflation rather than taking pay cuts and are too simple minded to figure out that, either way, the result is a lower standard of living. The rapid emergence of COLA’s in response to the inflation in the 1960’s and 1970’s suggests that workers aren’t as simple as Keynes’ supposed and that inflation’s employment stimulus, at best, is transitory. More importantly, Keynes ignores, or discounts, the deleterious effect of inflation on employment. All markets depend on price signals. Inflation is loud background noise that interferes with those signals. This interference adds costs, decreases efficiency, and, in so doing, costs far more jobs.

The argument for a weak currency rests on a similar assumption; a weak currency will make exports relatively cheaper (not to make, but for foreigners to buy); exporters will sell more (but will profit less); and that employment will increase to meet demand for exported goods stimulated by a weaker dollar.

This policy, too, has costs that exceed any supposed benefits. Devaluing the currency reduces the value of every dollar denominated good, service, and asset. The dollar looses 15% of its value, and everyone making a living in dollars must pay more for a barrel of oil, a gallon of gas, an ounce of gold, lithium for green batteries, and every other imported product, as well as every domestically produced product that uses imported parts or materials. Any boost in export dependent employment is more than offset by the almost universal increase in the dollar denominated cost of imported raw materials, goods, and services. Exporters, instead, could boost demand by cutting their prices. The producer would get any benefit and bears the costs. But Keynes and Krugman apparently would rather depress employment in the whole economy to boost employment in export dependent industries.

According to Keynes and Krugman, running huge deficits – maxing out the national credit card – raises “aggregate demand” in the short run and, in theory, increases employment. At least Keynes conceded that such a spending binge also would decreases aggregate demand and depress employment in the future as future tax revenues are used to pay the old debt instead of new purchases. Think of making a big credit card purchase one month and then making a big payment each month to pay off the balance over time; past consumption (the big purchase) must be paid back with wages paid for future production (your labor).

Krugman posits that paying one man to dig a hole in the morning and paying another to fill it up in the afternoon is good for the economy when there is high unemployment because it boosts aggregate demand. This is such manifest nonsense only a VSP like Paul could believe it. The activity produces nothing of value. And it wears out the shovel. But, if we keep digging, maybe the debt hole will eventually get to China.



Let me put it this way...given the decline in property values and property taxes which have caused huge cutbacks in education-related spending, it's easier for me to get a job teaching English here in Beijing (where I am currently living), than back home in the States, where schools are laying off teachers right and left. Not only that, but on an hourly basis I am getting paid a lot more too...


Something else to think about...

Closing price of S&P 500 today: 1344
Closing price of S&P 500 the day Lehman Brothers filed for bankruptcy: 1193

Which means that despite the fact that unemployment has roughly doubled since the beginning of the financial crsis, the stock market is actually 12.7% higher!

Corporations are back to raking in $$$ hand over fist, while many American workers are struggling to make ends meet.

What is wrong with this picture?

gentian violet

A high stock market doesn't mean "corporations are making money hand over fist". It means that semi-rich suckers are speculating by buying stock. These companies aren't spending anything despite what money they are holding, because they don't know what it's going to cost them next year to hire someone, even at a lower wage. Health care will go up, taxes will probably go up, the Dodd-Frank financial bill is a dog's breakfast of meaningless but expensive regulations - it just costs too much in America to do business, thanks to the government trying to "help" . And why should they? The Democrats and the White House are calling them names and demonizing the very people they want to start hiring - why should they? They can go someplace where their job creating acytivities are appreciated and labor doesn't cost so much.


These facts would be trumpeted throughout the land if GWB were still president. Now mum's the word.


If the economy is so bad, why are prices not falling? When does the whole system reach equilibrium?

Larry Siegel

Hi Justin - Larry Siegel here, from the Q Group. If you say I should be worried, I will be. I have generally regarded jobs reports as wildly inaccurate, being the net of two numbers (jobs created and jobs destroyed) that are themselves reported with great imprecision; then the netting process leverages the imprecision. I would also regard a high jobs-destroyed number as generally positive if it is accompanied by a much larger jobs-created number, but I am not sure where to get these data. I wish your article were longer and more descriptive of why this particular jobs report is so bad, especially given that we have had negative net job growth in many months in the fairly recent past. Please E-mail me if you care to.