On the Latest Jobs Figures

by Pejman Yousefzadeh on August 6, 2012

Let’s be clear about something: 163,000 new jobs created last month is not anything to celebrate. To be sure, it is better than the five figure number of jobs created in the previous month, but still far short of where we have to be in terms of keeping up with population growth. The stock market may have reacted favorably to the job numbers, but as William Easterly perceptively tweeted, “Investors so desperate for good news, they celebrate positive report on the second derivative of jobs.” For non-math nerds, what that means is that we aren’t celebrating the change in the number of jobs (since that change is far too small), but rather, the change in the change in the number of jobs–we are happy that more jobs were created in the past month than they were in previous months, but we shouldn’t think for a moment that the number of jobs created is enough to get the employment market out of its doldrums.

In fact, we ought to be creating something along the lines of 250,000 jobs a month if we want to make any kind of dent in the unemployment figures, and if memory serves, the sitting vice president of the United States promised us two years ago that we would be creating 500,000 jobs per month. That we are hailing the creation of 163,000 jobs as indicative of some kind of resilience in the employment market shows just how low our expectations have sunk. I understand that we are not primed to think that we will make all that much progress in the Obama economy, but surely we can do better than this, and surely we can expect more than what has been delivered.

This story points out that there is a lot to be worried about when it comes to the employment market:

“It’s a relief we did not post another number like 75,000, but the reality is it’s not night and day. It’s not as though it brings us all the way back to being wildly optimistic,” said Robert DiClemente, chief U.S. economist at Citigroup in New York.

[. . .]

Details of the household survey, from which the unemployment rate is drawn, gave a downbeat assessment of the labor market, with the share of the population that has a job falling to near cycle lows.

In addition, the labor force participation rate, or the percentage of Americans who either have a job or are looking for one, fell to 63.7 percent last month from 63.8 percent. That is a sign of low confidence in the labor market.

The unemployment rate actually increased to about 8.3%–the Obama administration thinks that it would make a massive difference in shaping public expectations if it points out that the rate is 8.254%, which shows just how desperate the administration is to put out good news of any kind. The increase in unemployment came despite the fact that the labor participation rate fell; lots of times, a decrease in the labor participation rate leads to a lower unemployment rate because of the way in which the unemployment figures are calculated. Again, this very plainly means that we are not creating enough jobs to keep up with the increase in population. This remains a very weak labor market.

It would be nice to think that all of this would mean immensely bad publicity for the Obama administration and for the Obama campaign as well. But instead of focusing on the godawful jobs figures and situation, the media focuses on thumb-sucking stories speculating whether Harry Reid is right to be a McCarthyite and whether lesser-ranking (but no less vicious and despicable) McCarthyites in the blogosphere and in the larger world of punditry are right to give his ridiculous accusations any credence. Of course, if Harry Reid really wants to look for tax cheats, he is searching in the wrong place, but leave it to the media to miss that key fact as well.

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