Posts Tagged ‘jobs’

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I often explain to students, when I’m teaching economic models, they have to look at what’s happening behind the blackboard—all the implicit mechanisms that allow the models to work as they do.

By the same token, we have to ask, what’s going on behind the unemployment headlines?

The headlines today all trumpet the number of new jobs added in September (248,000), such that the official unemployment rate fell for the first time since August 2008 to below 6 percent (5.9 percent, to be exact).

That’s good news. Employment is picking up. But, of course, that’s not the end of the story. And Tyler Durden helps us see why.

quality of jobs

First, most of the new jobs (4 of the top 5 categories) were in retail trade, leisure and hospitality, education and health, and temp help.

So yes, America added a whole lot of minimum wage waiters, store clerks, groundskeepers and temps: truly the stuff New Normal “recoveries” are made of.

participation rate sept 2014

Second, the labor force participation rate dropped once again—from an already three decade low in August—to 62.7 percent. In other words, as against the 232,000 people who found jobs, the number of people not in the labor force rose to a new record high, increasing by 315,000 to 92.6 million!

average hourly earnings sept 2014

And finally, even while new jobs are being created, hourly earnings are not moving at all (in fact, to be accurate, they actually declined by a penny from the $24.54 in August). In other words, real wages—accounting for inflation—continue to decline.

So, that’s what’s happening behind the triumphant unemployment headlines: the continued creation of lousy, low-paying jobs; the continued exit of hundreds of thousands of workers from the labor force; and the continued decline in real wages.

Anyone want to talk about the reserve army of labor?

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Chart of the day

Posted: 24 September 2014 in Uncategorized
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According to a new study by Carl Van Horn, Cliff Zukin, and Allison Kopicki [pdf], for the John J. Heldrich Center for Workforce Development,

nearly 30 million people — say they were laid off from a job in the past five years. Nearly 4 in 10 of these laid-off workers say they searched for a job for more than seven months before finding another one; one in five workers laid off during the past five years never found another job (see Figure 1). Of those who found another job, one in four say it was a temporary position.

Moreover, laid-off workers who found another job seldom improved their financial situation: two-thirds say their new jobs either paid less than their previous one (46 percent) or paid the same (21 percent). It’s no surprise then that nearly half of the reemployed workers say their new job was a step down for them compared to what they were doing five years ago. Just a quarter say their new job was a step up and only a third say they are receiving higher pay.

Economic-Recovery-Room

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