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Employment Improves… Or Does It?

By on October 22nd, 2013

The Bureau of Labor Statistics issued its September employment report on Tuesday, October 22; it was delayed because of the shutdown. The unemployment rate fell from 7.3% to 7.2%. The BLS advised that the change was minor due to rounding, using the phrase “little changed.”

According to the household survey, employment increased by +133,000 while -136,000 left the workforce. The much-reported levels of part-time workers actually remains within historical levels, and is less of a big deal than is made of it.

Businesses have been planning for the Affordable Care Act since its passage and have made operational investments for its implementation. The sluggish job market is the true effect of the adjustments, and whining about part-time employment is the “shiny object” that diverts attention from other economic factors.

The lack of forward-focused expansionary business investment has been a serious problem in the economy for many years. Businesses are generally focusing on near-term efficiency improvements. They are predictable, measurable, have quicker payback, and more certainty of return than long-term expansionary investments. The latter usually have negative cash flows in early years and greater financial risk. Those future cash flows are also discounted by expected inflation rates and the likelihood of higher future tax rates (of all types) and/or regulatory costs.

It is also likely that current part-time workers will have some hours cut, but much of that will be masked by the usual post-holiday adjustments to retail workers schedules. Currently, worker hours have been flat for the last year.

As far as new hiring goes, there should be no surprise that a portion of new hires will be within the guidelines of the ACA limitations on hours worked. We should be more surprised that people are surprised.

Printing industry employment fell by 2,100 from August, and is down -14,700 since September 2012 (-3.2%). The evidence of printing industry consolidation may be seen in the decline of “non-production” workers. That class of worker has declined by -7,800 (-5.3%) since September 2012. (click chart to enlarge)

employment 102213

August public relations employment continues to show the shift in media allocation. Compared to 2012, employment is up +7.6% while overall agency employment is flat. Graphic design employment is up +2.5% compared to last year. The October report to be issued on November 8. It is likely that the October unemployment rate may spike higher because of the brief shutdown. The BLS will advise of the net effects of the shutdown on employment data at that time.

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  1. 6 Responses to “Employment Improves… Or Does It?”

  2. By James Evans on Oct 23, 2013 | Reply

    I love your quote “We should be more surprised that people are surprised.”

    Isn’t that the truth! What did people think that this *ahem* questionable legislation was going to do to the job market?

  3. By B Jones on Oct 24, 2013 | Reply

    I don’t get why James is so in love with a quote about a POSSIBLE future situation. It’s the same scary scenario that has been predicted, yet hasn’t shown up! Let’s look at facts, not unproven speculation. It’s typical Dr. Joe beat-down of the recovery because of his inherent political leanings.

  4. By Dr. Joe Webb on Oct 24, 2013 | Reply

    Which political leanings are those? The fact that GDP is 100 basis points below the post-WW2 average for the last decade? Or is it the political leaning that the labor participation rate is at a 35-year low? Or perhaps it’s the political leaning that the increase in the S&P 500 has yet to reach its inflation adjusted peak, and that 60% of the increase in the S&P is the result of stock buybacks and not organic growth. Maybe the political leaning that real per capita incomes are stagnant for more than a decade is the problem. Perhaps it’s that workers are increasing their productivity for more than a decade, but there has been no real inflation-adjusted increase in their wages. Follow the long-term data. This economy has had problems for quite some time. It got its bearings in the mid-90s when capital investment was rewarded, unemployment went below 4%. Those were times of fiscal restraint and economic incentive. For the last decade, we have had neither.

  5. By Carl Gerhardt on Oct 24, 2013 | Reply

    Amen Dr. Joe! Facts are facts. It’s a scary political world we live in.

  6. By Jim on Oct 25, 2013 | Reply

    Right on Dr. Joe! The minute you gives facts about the poor economical situation we are in, you are being political, racist or an extremist. The facts are clear and can’t be dismissed.

  7. By Jack R on Oct 25, 2013 | Reply

    Way to go Dr Joe. Just let the data do the talking. One might consider that for the last decade neither party has done much to relieve the corporate tax burden, while pushing their own agendas, not agendas driven by the voter. And we still get hit by Wall Street greed. banking and financial are industries that should regulate themselves? Well, what we have today might better than regulations by politicians.