Jobs Report: Running Low on Economic Medicine, Hope

Total nonfarm payroll employment declined by 131,000 in July, and the unemployment rate was unchanged at 9.5 percent, the U.S. Bureau of Labor Statistics reported today. Federal government employment fell, as 143,000 temporary workers hired for the decennial census completed their work. Private-sector payroll employment edged up by 71,000.

We have been in the present labor market swoon since December 2007. We are 30 months into the process. Nearly everything is not getting worse fast. Most economic indicators have seen slow, uneven progress. We are a weary nation and hope is running low. We have received a massive dosage – an overdose- of bad economic news since the winter of 2007.

Things are getting ever so slightly less bad in the aggregate. Our sheriffs are the Treasury and the Fed and they have spent, cut taxes, slashed rates, bought securities and ballooned their balance sheets. They have made the bad less worse, but not appreciable better enough for many. The sheriffs of this rough economic neighborhood are running low on and out of ammunition. The populace is fed up. All that economic toxin still pumps the blood of this economy. Now, the state is having a contractionary direct impact on employment.

Also See: Rick Wolff | Economic Recovery for the Few

Highlights of Today’s Report

The pick-up in private sector hiring is a good sign. It is too little and too late in the face of waning state spending. We also have built a huge shadow inventory of the unemployed, similar to the situation in private housing. The shadow inventory of workers includes the discouraged and involuntary part timers. March and April were much stronger months for hiring than June and July 2010. The July numbers are distorted by 143,000 job losses among temporary census workers. Average hours worked increased .1 hours to 33.5hours per week. Average hourly earnings were up 2cents in July.

Lowlights of Today’s Report

The duration of unemployment is a very serious issue. 6.6 Million Americans, 44.9% of the unemployed, have been out of work for more than 6 months. U-6, inclusive unemployment that counts discouraged and involuntary part time workers, stayed high at 16.5% in July. State government’s payrolls declined by 10,000 in July. Local governments shed 38,000 jobs last month.

Major conclusion

Persistent cuts in Federal, state and local hiring and spending threaten more than just the monthly job numbers. It is perilous and unwise to slash public goods spending at this time. Public goods provision is about social cohesion and stability as much as GDP and employment. There were 202,000 job losses at the government level with reduced employment at the Federal, state and local levels.

The risk going forward is that hope is ebbing and so is so support. We got such a dose of pain and we are running low on available medicine.

Productivity

From the first quarter of 2009 to the first quarter of 2010, output increased 3.0 percent while hours fell 3.0 percent, yielding an increase in productivity of 6.1 percent.

As productivity and profit rise with stagnant wages and falling employment, we are watching an upward redistribution of wealth amid tough economic times. This has been dramatic and comes as we go into election season. This should be watched moving forward. For the year ended June 2010 wages and salaries rose 1.6%. Over the same year, all items less housing rose in price by 1.9%. Thus, real earnings were flat to down amid sliding benefits and falling employment. Corporate profits have performed better, as have asset markets and values.