Our U-7 index includes everyone in the government’s U-3: everyone who said they wanted a job and had looked for one in the past four weeks. It also adds everyone who said they wanted one, hadn’t looked in the past four weeks, but had in the past year. (These people are included in the government’s most inclusive statistic, U-6). But we also add people who hadn’t looked in the past year but still said they wanted a job and would take one. Finally, we add people working part-time, but say they are looking for full-time work, like “consultants” I know, who may have worked only one hour in the week the government survey taker came calling, but are still tallied as officially “employed.”
Well, the stock markets, both at home and abroad, seem to think this morning’s jobs numbers are good, very good news. As a headline in London’s Financial Times online put it, “Stocks gain on better US jobs data.” The copy that followed:
“Stronger than expected US jobs data have helped lift S&P…The dollar recovered early losses as the outlook for the US economy improves.”
The Wall St. Journal online had a similarly positive spin: Jonathan House and Eric Morath wrote:
“The latest report showed the labor market maintaining its momentum despite worries about another slowdown as the summer approaches and the effects of government spending cuts start to bite.”
“The improvement in the labor market is a sign companies are looking beyond fiscal restraint this quarter and are optimistic enough about the prospects for demand in the second half of the year. At the same time, bigger job and wage gains are needed to move Federal Reserve policy makers closer to scaling back record monetary stimulus.”
On Twitter, an economist we much admire, Michigan’s Justin Wolfers chirped graphically:
Graphing payrolls growth over the past year: â–‚â–â–ƒâ–„â–ƒâ–ƒâ–†â–…â–ƒâ–ˆâ–ƒâ–ƒâ–„ This month’s +175k continues the trend. (Average of +172k over past 12 months.)
— Justin Wolfers (@justinwolfers) June 7, 2013
(Pretty cool use of Twitter, BTW.)
But why is everyone so upbeat? Yes, the survey of “establishments” reported that the economy added a fair number of jobs: 175,000. But downward revisions deducted 12,000 jobs from the previous two months this spring. Moreover, the government’s survey of households, during which they ask real people questions about their employment status, reported 100,000 more Americans who hadn’t worked even one hour in the past week.
And an additional 300,000 adults said they wanted a job and didn’t have one, but they aren’t even counted in the labor force because they hadn’t looked for work in the past week or more. That total had to be seasonally adjusted to get it down below 7 million, a height it hasn’t reached in more than a year. All this means there are a whole heap of “discouraged workers.”
Add in the fact that the number of part-time workers who were looking for full-time employment held steady at nearly 8 million, and you can see why our own all-inclusive reckoning of un- and underemployment, U-7, went up from 16 percent to above 16.1 percent. But hey, the government’s own official number (U-3) rose from 7.5 percent to 7.6 percent.
These data tend to support rather gloomier assessments of today’s numbers, as offered by Talking Points Memo’s Brian Beutler:
Looks like public sector lost 3,000 total jobs in May, but the feds shed 14,000 alone. First sequestration sign I can recall in jobs report.
— Brian Beutler (@brianbeutler) June 7, 2013
National Journal Hotline’s Reid Wilson added:
Federal workforce (2748k) down to its lowest rate since February 2008 BLS report (2747k)
— Reid Wilson (@HotlineReid) June 7, 2013
David Wessel, of the Wall Street Journal, had this to say:
In May 3.15 million in US had been out of work a year or more and were still looking, up 65k from April, down 651k from year ago: BLS.
— David Wessel (@davidmwessel) June 7, 2013
And under the headline “U.S. Added 175,000 Jobs in May; Jobless Rate Rises to 7.6%,” Catherine Rampell of the New York Times noted:
“The federal government lost 14,000 jobs in May, and the spending cuts probably also had effects in the private sector, as laid-off or furloughed government workers had less money to spend at their local businesses.
Most disturbing of all may be the fact that African-American unemployment rose back to 13.5 percent from 13.2 percent and, among teenagers not in school, the rate soared from an already astonishing 40.5 percent to a nearly incomprehensible 42.6 percent, which is far higher than it was a year ago at 36.4 percent. I’ve written about this grimly on the Making Sen$e Business Desk but — and I don’t mean to take any given month’s numbers too seriously — these data, if real, are truly troubling.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions