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Joe Guzzardi: Statistics make economy look better than it actually is

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Posted: Saturday, May 10, 2014 12:00 am

The Bureau of Labor Statistics’ April jobs report showed mixed results. When analyzed from a California-specific perspective, the BLS and other economic data continue negative.

I gathered much of the beneath-the-surface jobs information from blogs and non-partisan Washington, D.C. think tanks that specialize in critically analyzing current employment statistics. Anyone who’s been reading these sources knows that conditions in the job market are worsening, not improving.

From the big picture, let’s look at the positive: Employers added 288,000 jobs in April, more than the 218,000 economists expected. The official unemployment rate declined from 6.7 percent to 6.3 percent.

Beyond those two facts, the picture turns bleak. The unemployment rate dropped because the number of people working or seeking work declined and they’re are not included in the BLS calculation. Tellingly, the labor force participation rate registered 62.8 percent, down from March’s 63.2 percent, while the employment-population ratio remained steady at 58.9 percent.

Overall, the nation is in the deep doldrums. During the first quarter of 2014, the economy inched microscopically higher at a sorry annualized 0.1 percent. More than 3.7 million Americans have been out of work more than six months, and 3.6 million make the minimum wage.

The reasons for the prolonged slump are many. First, supplemental BLS research found that during 2013, in 20 percent of America’s 80.4 million families, no one worked — a total of 16.1 million people. BLS defines a family as a group of two or more people who live together and who are related by birth, adoption or marriage. Unemployed, according to BLS, refers to a person who is available for work, doesn’t have a job but has actively looked for one in the last four weeks.

Second, those who have gotten a job over the last few months earn little. The National Law Project identified low-paying health care, food services and retail as the fastest-growing areas for jobs. Since 2010, lower-wage industries accounted for 44 percent of all employment. Going back six years further, the U.S. has added 1.85 million jobs in low-wage industries, but mid-wage and higher-wage industries have lost nearly 1 million positions each.

Third, the Wall Street Journal exposed how miserable employment prospects are for young Americans. Only 40 percent of recent college graduates find jobs that justify their years of education and their hefty tuition debt. They can’t afford house down payments or even, in many cases, rent.

Consequently, 2.3 million young California adults live with their parents, more than at any time in recent history.

And it’s not just young adults (ages 18 to 26) who are moving back with Mom and Dad because they can’t come up with rent money. According to Steve P. Wallace, UCLA Professor of Public Health, for the seven-year period between 2005 and 2013, the number of Californians aged 54 to 64 who lived in their parents’ homes skyrocketed 67.6 percent to about 194,000. The increase in the 54 to 64 demographic is almost exclusively tied to financial hardship and not other reasons like needing to care for aging parents.

That so many Californians are quasi-homeless is consistent with the fact that between 2008 and 2012, the Golden State lost 855,200 private-sector jobs, going from 12.6 million in January 2008 to 11.8 million in 2012, a decline of 6.8 percent. California’s U-6 unemployment rate, which includes those without a job but still looking, those working part time and those who have given up the search, is 16.7 percent versus the official 8.6 percent.

For Wall Street’s benefit, the White House spins the monthly BLS reports in the most positive way. Only those committed to seeing the complete picture search deeper. The first step toward a jobs recovery would include more honest reporting that tells the full story, and doesn’t just cherry pick the good news.

Before Joe Guzzardi moved to Lodi, he worked as a Wall Street banker. Contact him at guzzjoe@yahoo.com.

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1 comment:

  • Christina Welch posted at 8:57 pm on Thu, May 15, 2014.

    Christina Welch Posts: 460

    "The first step toward a jobs recovery would include more honest reporting that tells the full story, and doesn’t just cherry pick the good news." Agreed.

    And what would be the next step, then? I would like to see a follow-up to this article with some of Joe's suggestions for stimulating job creation and growth. I think that would be an interesting read.



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