More Jobs Mirage
Paul Craig Roberts
by Paul Craig Roberts: A
Government Shutdown Imperils the Power of Congress
on March 4 that 192,000 new jobs were created in February was greeted
with a sigh of relief. But the number is just more smoke and mirrors,
as I will show shortly. First, lets pretend the jobs are real.
What areas of the economy produced the jobs?
the Bureau of Labor Statistics, 152,000 of the jobs or 79% are in
private services, consisting of: 11,700 jobs in wholesale trade,
22,000 in transportation and warehousing, 36,400 in administration
and waste services (of which 15,500 are temporary help services),
and 36,200 in ambulatory health care services and nursing and residential
care facilities. Entertainment, waitresses and bartenders accounted
for 20,000. Repair and maintenance, laundry services, and membership
associations accounted for 14,000.
As one who
has often reported the monthly payroll jobs breakdown, I am struck
by the fact that these categories are the ones that have accounted
for job growth for year after year. How can this be? How can Americans,
who have had no growth in their real incomes and who are foreclosed
from their homes and maxed out on credit card debt, car payments,
and student loans, spend more every month in bars and restaurants?
How can a few service areas of the economy grow when nothing else
is that there were not 192,000 new jobs. Statistician John Williams
estimates the reported gain was overstated by about 230,000 jobs.
In other words, about 38,000 jobs were lost in February.
There are various
reasons that job gains are overstated and losses understated. One
is the BLSs birth-death model. This is a way of
estimating the net of non-reported new jobs from business start-ups
and job losses from business shut-downs. During recessions this
model doesnt work, because the model is based on good times
when new jobs always exceed lost jobs. On the death
side, if a company goes out of business because of recession and,
therefore, doesnt report its payroll, the BLS assumes the
previously reported employees are still in place. On the birth
side, the BLS adds 30,000 jobs to the monthly numbers as an estimate
of new start-ups.
estimates the death side is really reducing employment
by about 200,000 per month, and the birth side is stillborn.
Therefore, the BLS continues regularly to overestimate monthly
growth in payroll employment by roughly 230,000 jobs. The
benchmark revisions of payroll jobs bear out Williams. The last
two benchmark revisions resulted in a reduction of previously reported
employment gains of about 2 million jobs.
is that despite 10 years of population growth, there are 8 to 9
million fewer Americans employed today than a decade ago.
Economy we have. If only we could have the old one back.
Craig Roberts [send
him mail], a
former Assistant Secretary of the US Treasury and former associate
editor of the Wall Street Journal, has been reporting shocking cases
of prosecutorial abuse for two decades. A new edition of his book,
Tyranny of Good Intentions,
co-authored with Lawrence Stratton, a documented account of how
Americans lost the protection of law, has been released by Random
© 2011 Paul Craig Roberts
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