The Maddening Variance Between Economists & MSM Reporting on November #Jobs | Blog#42

The Politicization of Jobs Reports is Getting Worse

Friday’s November jobs numbers came with what seems, at first glance, a downward shift in the percentage in unemployment, to 4.6%, which is under the 5% boundary at which the Fed can consider beginning to raise interest rates. What’s key here is looking at the various moving parts, rather than just the official unemployment rate. As I’ve written many times over the past couple of years, how we count the unemployed is very tricky. There is the official rate and then there is real unemployment.

So, when I reviewed the way the November jobs numbers were being reported by journalists across media outlets, I was surprised at the variance between economists and outlets that are traditionally aligned with what we call the “liberal media,” the obliviousness to the facts and the history of jobs over the last eight years, and the decidedly derisive tone of some of the commentariat.

The New York Times’ Neil Irwin, unsurprisingly, pronounced The New Jobs Numbers Signal the End of an Economic Era:

“The economy isn’t perfect; it never is. But Mr. Trump will be inheriting an economy largely healed from its trauma of the last nine years, and with most indicators pointing in the right direction. Everyone can hope that the next chapter in that economic history of the United States will be a more boring one than the last.”

NPR, especially, gave its listeners a decidedly neoliberal view in this Marketplace segment hosted by Kai Ryssdal, with a panel that included the Washington Post’s Catherine Rampell, following a discussion with NPR’s national correspondent on the jobs numbers and the state of the economy. Rampell, for those of you who don’t know was trained in economics at Princeton University.

An alien from outer space listening to the Marketplace panel discussion, and the wrap-up that was broadcast later on, would have gotten the distinct impression from the banter that, whatever happened as a result of the Great Recession, the economy is completely recovered. Remember, this is public radio which, in most people’s minds, presents fair and balanced news from the center of our politics – not quite progressive, but also not quite neoliberal.

But what listeners got from Marketplace was the same thing viewers got from CNBC, minus the disrespect and the number of unemployed and underemployed.

What ‘are so many of them doing?’ 95 million not in US labor force


Big difference between the job numbers and perception: Kelly

The November jobs report looked pretty good on the surface except for one number that popped off the page: 95 million.

That’s the number of Americans now counted as not in the labor force, a historic high that has confounded economists and policymakers. The total — 95.06 million to be more exact — has been rising consistently but surged by a gaudy 446,000 last month.

The jump occurred as the U.S. economy added 178,000 jobs and the headline unemployment rate dropped sharply.

Explaining the consistent increase in those leaving the labor force is complicated, with factors divided between an aging and rapidly retiring workforce, a skills gap that leaves job openings unfilled, and the nettlesome problem of too many people who find it’s just easier to collect welfare and other transfer payments rather than go back to work.

[Read the rest at CNBC]

Perception? Ghost armies? Felons falling out of the labor force? Political perception that millions are out of work? You mean, like some kind of shared mirage?

95 million. This is the first time any pundit or media outlet publishes any kind of figure associated with the ranks of the unemployed and underemployed, much less one that is as shocking to the eyes as this one. As I’ve often complained in my commentary, any real discussion on unemployment, underemployment and the new social class economist Guy Standing calls the ‘precariat,’ completely dropped off in 2014, in preparation for the recent presidential election. The election was lost by Hillary Clinton because she chose to pretend these 95 million people don’t exist, all the while labeling a portion of them, white blue collar workers, racist.

Then, we have the right of center and right media pushing the fallacy of a skills gap. In Pew’s ‘Why The Skills Gap Doesn’t Explain Slow Hiring,‘ it is reported that:

“The way to close this “skills gap,” they say, is to improve job training and more closely align higher education to employment.

But this solution, promoted by politicians as the way to help workers left behind by globalization and automation — both major challenges for the country in the 21st century — is too simplistic.

Throwing more public dollars at education and training won’t be enough to connect willing workers to open jobs. In many places, employers are also setting wages too low, defining qualifications too narrowly, or not recruiting widely enough. Many people who are eager to work can’t because they lack transportation, or don’t have anybody to watch their children during the workday.

Besides, a lot of the open jobs that employers are struggling to fill right now don’t require any education or training beyond high school.”

Another argument brought forth by center-right and right media is that people aren’t willing to retrain or look for jobs immediately beyond their communities. But as reported by the Atlantic in “The ‘Losers’ in America’s Trade Policy “:

“This is perhaps not surprising to people in the policy community: Retraining, as it exists now in America, doesn’t often work.“It’s not just that TAA isn’t working. It’s that the entire portfolio of labor-market adjustment policies in the U.S. isn’t working,” Chad Bown, a senior fellow at the Peterson Institute for International Economics, told me. That means few programs that aim to help people after job loss actually do so.

Why haven’t these programs been successful? The biggest reason, according to Kermit Kaleba, the federal policy director of the National Skills Coalition, is that communities such as Clarion that see factories shutting down are often suffering economically. That leaves few other opportunities for people, no matter what skills they can learn. “Training doesn’t create jobs, training provides opportunities while there are jobs,” Kaleba told me. “If a factory closes down, that doesn’t mean there’s a set of corresponding work opportunities.”

Of course, there may be jobs in other communities. But they present yet another problem: the low likelihood that workers will relocate.”

Then, the danger in reporting that we are completely recovered gives the half of the nation that is well-off the impression of “Good News! We’re as Rich As We Were in 1998!

“Larry Mishel said that he can easily spin this report into a glass-half-empty story. He points out that average household incomes are still less than they were in 2007, after adjusting for inflation. And, in 2007, average household income was less than what it had been in 1999. So another way of looking at the report is that household income in 2015 was almost exactly the same as it was in 1998.”

The thing, though, is that life as it was in 1998 in no way resembles life as it is now and without a leadership that is truly willing to face that fact, when it is known that automation and a world with a lot less work are just a few years away. What are we doing to prepare for the looming crisis? Nothing. But we should be preparing for a world without work and demanding from our politicians to begin considering and implementing a plan for a basic universal income.

In, “A World Without Work,” Ryan Avent writes:

“Some day, probably not in our lifetimes but perhaps not long after, machines will be able to do most of the tasks that people can. At that point, a truly workless world should be possible. If everyone, not just the rich, had robots at their beck and call, then such powerful technology would free them from the need to submit to the realities of the market to put food on the table.

Of course, we then have to figure out what to do not only with ourselves but with one another. Just as a lottery cheque does not free the winner from the shackles of the human condition, all-purpose machine intelligence will not magically allow us all to get along. And what is especially tricky about a world without work is that we must begin building the social institutions to survive it long before the technological obsolescence of human workers actually arrives.”

Denying the narrative that there is a half of America that isn’t thriving, but is subsisting at barely poverty level when, by all rights, they should have remained in the middle class is political suicide of the kind Hillary Clinton and the Democratic establishment committed in this election cycle. The fact that Nancy Pelosi and Chuck Schumer are now leading Democrats in Congress is indicative of the fact that the establishment will continue to act as it has. The Hill reports:

“Rep. Nancy Pelosi (Calif.) secured another term as Democratic leader on Wednesday, beating back a rare challenge, from Rep. Tim Ryan (Ohio), in a 134-63 vote.

Pelosi’s victory shows that while there’s an appetite for changes to the party’s leadership structure and messaging tactics, it’s not strong enough to loosen her grip on a liberal-heavy caucus that has seldom questioned her authority.

“We know how to win elections,” she said after the closed-door vote on Capitol Hill. “We’ve done it in the past; we will do it again.””

But that is precisely why “we’ve done it in the past” failed the last four elections and half of democratic voters are angry! Who are they? Not the people the media has identified for us!

Profiling The Angry American In This New Political And Economic Era | Blog#42

Were angry, disillusioned voters all white? Here is what the data demonstrate:

Silent Revolt: Democrats Voted Down Neoliberalism | 2016’s Lessons for #Progressives Blog#42

Clinton’s strategy, of course, did not work and Donald J. Trump won the election, in spite of the fact that voters believed neither candidate’s campaign promises. One thing Trump did, however, was address a higher minimum wage, something Hillary Clinton largely stayed away from, once her primary against Bernie Sanders was over:

The Election From Hell: Trust, Trade, Jobs & #HillaryEmail on Blog#42

Now, let’s look at what the economists have to say:

Jared Bernstein:

Another solid jobs report, but wage growth NOT pushing up price growth (so chill, Fed…)

December 2nd, 2016 at 9:39 am

Payrolls were up 178,000 last month and the unemployment rate fell to a nine-year low of 4.6 percent, in yet another installment of solid, monthly job reports. Wage growth was flat in November, manufacturing jobs are down, and the labor force contracted slightly, so the report was not uniformly positive. But the job market continues to close in on full employment, and the Federal Reserve is unlikely to see anything in today’s report to prevent them from tapping the brakes with an interest rate hike at their meeting later this month.

Below, however, I argue that the absence of inflationary pressure should make them think twice before slowing a labor market that’s finally delivering jobs and (looking at the trend versus just November’s data) wage gains to workers who’ve long been left behind.

Also, in today’s write-up, I feature a quick comparison of two job markets: the one inherited by president-elect Donald Trump and the one inherited 8 years ago by Barack Obama. The difference is really something.

Smoothing out the monthly bips and bops, we see that the 178,000 payroll gain is very much in lockstep with the underlying trend in the pace of job creation. As revisions slightly lowered gains in the prior two months, the patented JB smoother shows that average monthly job gains in the last three months were 176,000. That’s a slight deceleration from the 205K pace over the past 6 months, but broadly speaking, we’re adding north of 170K jobs per month this year, a pace of job growth that should be plenty fast enough to keep the job market on target for reaching full employment at some point later next year.

smoother_dec

But isn’t 4.6% unemployment at or below most people’s definition of the lowest unemployment can go without triggering spiraling price growth? Yes, but there are very important mitigating factors.

–The underemployment rate, which also fell last month, is, at 9.3%, still well above its full employment level, which I judge to be around 8.5%. This rate captures slack that’s not in the headline rate, including involuntary part-time workers. As the job market tightens, the number of such workers is solidly trending down (down about 400K over the past year, to 5.7 million), a clear and positive symptom of job market improvement. But this key indicator is still too high.

–The labor force participation rate is still too damn low. As noted, the labor force contracted a bit last month and this contributed to the decline in unemployment. While the size of the labor force is a very noisy monthly number, it should be noted that the less noisy participation rate remains, at 62.7%, historically low. Some of that has to do with demographics and retiring boomers. But the employment rate of 25-54 year-olds is still only slowly climbing back to pre-recession levels, and 8 years into the recovery, has only regained 60% of its recession-induced loss.

–Perhaps most importantly from the Fed’s perspective, wage growth is NOT bleeding into price growth (see below).

The report, as noted, includes a few less positive results. Manufacturing remains a real weak spot. Employment in the sector is down slightly each of the last four months, including 4,000 last month. This year, factory sector jobs are down 60,000; over a comparable period last year (Jan-Nov, 2015) they were up 20,000, and in 2014, they were up 186,000. This pattern links closely to the appreciation of the dollar, which makes our manufactured exports less competitive in foreign markets. It’s also a politically timely observation, suggesting were going to need much more thoughtful and systemic policy than president-elect Trump’s recent Carrier plant intervention.

Wage growth was surprisingly flat over the month (down 0.1%), but that’s probably mostly give-back from last month’s 0.4% pop. You’ve really got to look at the year-over-year trend for average hourly wages, which shows a 2.5% gain over the past year, very much on a trend that’s up from about 2% a year ago. In fact, if we average this wage series over the past three months and compare to the average for the three months before that, it’s growing at a 2.9% annual rate.

Which brings me to the Fed point. Today’s report will be scrutinized for evidence as to the Federal Reserve’s plans to raise the benchmark interest rate they control when they meet later this month. Before this morning’s release, futures markets put a 93% probability on a rate hike. After the release, that rose to 95%.

Those probabilities speak to the “will they” question. But should the Fed raise?

[Continued on Jared Bernstein’s blog]

Dean Baker via Mark Thoma:

Unemployment Rate Falls to 4.6 Percent in November, a New Low for Recovery

Dean Baker:

Unemployment Rate Falls to 4.6 Percent in November, a New Low for Recovery: The unemployment rate fell to 4.6 percent in November, almost equal to the pre-recession lows in 2007. However, the sharp decline was partly due to people leaving the labor force, the employment to-population ratio (EPOP) was unchanged at 59.7 percent. It actually fell slightly for prime-age workers (ages 25-54), from 78.2 percent to 78.1 percent, although it is still 0.7 percentage points above its year ago level.

The establishment survey put job growth at 178,000, roughly in line with expectations. The revisions for the prior two months’ data were largely offsetting, leaving the average for the last three months at 176,000.

This would be a healthy pace for an economy that is near full employment, but the low EPOP suggests that the economy still has a substantial way to before the labor force is fully employed. While there is some evidence of an acceleration in the pace of wage growth, it is very weak.

[Continue reading on Mark Thoma’s blog]

Robert Reich:

Reich made the following comments on a CNBC article he posted to his Facebook page:

Today’s jobs report for November looks okay except for one big thing: 95 million Americans now are not counted as in the labor force. That’s an historic high, which makes a mockery of the 4.6 percent rate of unemployment since it’s really just 4.6 percent of people who are still counted as in the labor force. The number of people not counted as in the labor force has been rising consistently for years but it surged by 446,000 last month.

Why do we have so many missing workers?

1. About a quarter of those missing workers are aging baby boomers who are exiting from the work force.

2. Another quarter are people who don’t have the skills necessary for jobs that are available. Why don’t they get the skills they need? They often don’t know what’s needed, and couldn’t afford to get the skills training even if they did. The U.S. has the smallest and flimsiest job retraining programs in the entire post-industrial world. (Where is Trump’s economic nationalism when we need it?)

3. Another quarter are people on public assistance, such as food stamps and Social Security disability. Conservatives focus on them, but in my experience most people who get public assistance would far rather have a good job.

4. Which leaves a quarter unexplained. My guess is that these are people who are working at the margin, often paid under the table. But they, too, would rather have a good, steady job.

Bottom line: The American economy isn’t providing nearly as many good jobs as are needed. Pay no attention to that 4.6 percent unemployment rate. Counting everyone who would prefer to work, a more accurate measure would be closer to 10 percent real unemployment.

Trump’s neo industrial policies won’t create these jobs. We need major spending on infrastructure along with a new WPA (as we had during the New Deal).

We have to have a far more honest discussion on jobs, jobs reports and what they mean. It isn’t enough for economists who have guest column space in the nation’s top newspapers to write the truth in economese, only to have economic reporters undo the good they do by propagating the neoliberal agenda that everything is either mostly hunky dory or fabulously hunky dory. It isn’t. This disaster of an election is proof of it and unless the left establishment (DNC and the media) gets its rear end in gear and begins to address the blundering way in which it has been treating its left flank, one can be assured that the party will most surely split. After two years of Donald J. Trump, it is highly unlikely that blue collar and former middle class Democratic voters will be in any mood to elect neoliberal Democrats who continue to deny their very plight. If the Wall Street Journal can report like this, why won’t the others?

Baby Boomers vs. Millennials: The Uneven Jobs Recovery

Millennials see relatively slower progress on the labor front

A rising jobs tide isn’t lifting all boats equally.

The media’s interference in this election, attempting to establish the narrative of a largely completed economic recovery and racism on a sour-grapey far left white electorate not only was unsuccessful, but has brought about a further erosion of trust in our institutions. Like the DNC, the media is refusing to acknowledge errors it has committed in the last two years, building up to Election 2016.

What effect will this increase in distrust have on the public and its perception of media coverage of the incoming Trump administration? What effect will covering the economy in this way have in reinforcing the need for liberal and progressive politicians and voters to stop the bickering and recriminations and get ready for two political cycles of a jam-packed conservative agenda that absolutely must be opposed?

The truth about our economy could have been told without denigrating the achievements of an Obama administration that has faced only obstruction and nullification from the GOP and still managed to succeed to a great degree. What is wrong with keeping with the truth and striving for better? With everything that awaits us, it is imperative that the public perception undergo a major correction if we are to get ready for the decades to come, and not just the immediate crises.


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Related:

My Precariat series of articles

My series of articles on the politics of  how the unemployed are counted

Sanders America Town Hall on MSNBC:

Trump, Clinton, Sanders on the Fight For $15:

Nancy Pelosi: “Trump won on emotional issues, not weak Democratic message”

A lesson in civics every teen should watch: Bernie Sanders speaks to high school students in 2005.

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