Why Incomes Are So Much More Important Than Jobs

Tyler Durden's picture

After today's NFP number, even the most rosy-eyed optimists know that the jobs situation in the US is if not openly reverting into a double dip yet, then certainly scraping the bottom. What many are confused about is just why Obama and Biden were touting today's NFP so aggressively: the massive disappointment in the market post the announcement leaves only two possible explanations: 1) the president's advisors are all truly incompetent and have no idea what the market perceives as good or bad news, or 2) this was a calculated move to send markets lower, which in turn would hit the euro. If the latter is indeed the case, the question remains whether this is a benevolent (assist European exporters) or malevolent (throw Europe into unfixable turmoil) move. The response should be made clear long before the mid-term elections. Yet even with all these open items, the bottom line is that today's BLS report was very much irrelevant. As David Rosenberg highlights, it is not the actual employment, it's the income that this employment generates, that is important. And as he observes: "real organic income is still not growing and down nearly $500 billion from pre-recession levels."

More from Rosie on the topic:


It was fascinating to see that in April, we supposedly created 290k net new jobs and yet consumer spending stagnated in the U.S. And, in May, apparently the government numbers show a further 431k in net new job creation, and the retailers missed their sales target. According to the ADP, this is an extremely weak recovery in private payroll growth, especially in the context of the savage declines during the recession. In addition, real organic income is still not growing and down nearly $500 billion from pre-recession levels.

Let’s even assume for a moment that the government statistics on employment are accurate — wage and salary growth is slowing down nonetheless. Half of U.S. employers froze pay for at least part of their workforce in the past year and 13% made actual salary cuts (as per a WorldatWork survey cited in the Baltimore Sun). What a recovery! And, 1 in 3 of the companies that did freeze pay have no intention of departing from that strategy in the coming year.

In any event, it is really disconcerting to be seeing the flow of weekly jobless claims continue to come in north of 450,000 — as was the case yet again for the May 29th week. The four-week moving average of 459k is actually consistent with net job declines 75% of the time in the past. If we don’t see an improvement really

Rosie follows up with two anecdotes on the actual labor situation which provide a far more precise glimpse of what is happening in the country than the administration's daily show:

We got this very short email yesterday that just about sums it up.

“The Census taker that stopped by our house had a Mercedes SLK convertible.”

And this one was from James from Atlanta — also a gem

“Dave, Great insights in your letter as always...a comment on the elimination of minimum wages — this has in a way already effectively been done for manual labor. Drive by any Home Depot/Lowes in cities where there is an immigrant population and you will find an assortment of carpenters, drywallers, lawn care and "honey do-list" specialists, and movers willing to work "off the books". I have used these folks for a variety of small labor intensive projects around the house as do other colleagues of mine. Know of many licensed contractors that will use a laborer for a day or two of work on a job thus avoiding the payroll taxes and insurance that would normally be paid to the state/fed gov't. Just thought you should know what’s going on.”

Lastly, and off topic, here is some interesting insight from David on gold supply:

Bill, a reader of our research, sent us this thoughtful response yesterday on the supply outlook:

“Dear Dave:

Thanks so much for your daily commentary, which I follow with devotion.
Regarding gold supply from mines, here is a frequently overlooked point: because the ore deposits at any given mine are typically a limited quantity, prudent mine managers typically seek to mine the lowest grade ore available in their mine that will pay their costs at the current price, in order to extend the life of the mine as much as possible. In other words, as prices rise, they mine lower grade ore, which at a given level of throughput, results in lower total gold output.

Of course the situation varies at every mine. Some mines have a lot of low grade ore; others little flexibility to adjust. But the point holds.

Thus rising prices can result in an extended period of reduced production, until new mines come on line. However, new mine development is a process that takes years, and remember, investors need to be quite confident as to the permanence of a price level sufficient to make the mine economic over time.”

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faustian bargain's picture

Might want to edit that last quote block.

knukles's picture

As my Trusted, Honorable, Elected Public Servant (Really introduces himself that way.  Um hummh, really.) would say in private; "Mah Income is distinctly moah himpot-ant thain yoah Jowb."

Mactheknife's picture

Don't let those day laborers at HD fool you. Here's the real story.


homersimpson's picture

What's better - saying you closed the deal with 10 fat chicks in a month or one hot one in the same time period? Why folks don't understand this concept when it comes to jobs is beyond me.

Then again, if you're married, the better question is: Did the wife put out 10 quickies in a month, or one long session to the point your Viagra wore off?

ozziindaus's picture

or wacking off 10 times vs a little precum whilst flipping through Target junkmail

homersimpson's picture

That is NOT a good visual. Ugh. Esp. over a Playstation 3 ad..

ozziindaus's picture

Oh and backdooring fatchicks while they raid your fridge is pleasing?

MarketTruth's picture


(Must remember that quote for future use)

homersimpson's picture

You are saying that from a 3rd person point of view. I can't see what they're doing on the frontdoor side. Ignorance might be bliss in this case..

Tapeworm's picture

Would you like to explain this lowlife filth comment to someone that you respect? Can we maintain some decorum in the race to the bottom?

Gully Foyle's picture


I hear Fat Chicks are more giving, less about them and more about you.

So then the Fat Chicks win.

homersimpson's picture

But if they give more than you expected wouldn't that result in serious bodily harm or death?

The Rock's picture

You don't have to mention they were fat. Just like Leo, you just have to say that you nailed 10 hot chicks and post fake pics of them (a la SI girls). Btw, speaking of fat chicks, Walmart is hiring. So many fish (read: whales) so little time!

ISEEIT's picture

Marvelously constructed.

Internet Tough Guy's picture

No president would make a fool of himself intentionally. That's what Joe Biden is for.


Reflexivity's picture

Bush Sr. had Quayle...  I think it is the comparison tactic of influence:

Submerge your hand first in a bucket of cold water and then put it in a bucket of room-temperature water. The room-temperature water feels hot even though it really isn't.

faustian bargain's picture

The smart girls know to stand next to the fat ugly chick, not the hot one.

TBT or not TBT's picture

Might be a good foil for some segments of the potential assassin space.  And then Pelosi is currently 3rd in line.   They should both travel separately through January at least, or whenever the new Congress comes in.

knukles's picture

Holy Shit!  A Universal Truth!

Bush 2      Darth Vader
Clinton     Gore (Uh....Inventor Deluxe)
Reagan     Bush 1 (Lip Reader)
Ford         None (for a while....LOL)
Carter       Mondale (Bzzzzt. Lights flickering)
Nixon        Agnew (Oh, my.)
Truman     Alben Barkley (Really)

Go figure.
What a great fuckin' country.

mynhair's picture

I vote incompetent, retarded, and clueless.  Doubt if any of them know what EUR stands for.

Never ascribe ulterior motives to morons.

JohnG's picture

It's the Peter Principle on the national stage.

Mr Creosote's picture

Never ascribe to malice, that which can be explained by incompetence. -  Napoleon Bonaparte 

Hephasteus's picture

Napoleon Bonaparte is a malicious liar. Attributing it to incompetence is a malicous lying act.

RobD's picture

I'm going with incompetent. The first clue was picking Joe B for VP, the second was allowing him to get in front of a microphone.

Zina's picture

Drive by any Home Depot/Lowes in cities where there is an immigrant population and you will find an assortment of carpenters, drywallers, lawn care and "honey do-list" specialists, and movers willing to work "off the books".

Lots of people working "off the books"... Welcome to one more brazilian reality...

Here, people working "off the books" accounts for 45% of the workforce. You will see something like this in the US soon...

seventree's picture

Here's another wage example: a relative of mine works in a shop where staff has been cut back so it is physically impossible for the remaining workers to get everything done in a 40 hour week. Management has announced that no more overtime will be paid under any circumstances. They also let it be known that if full production is not maintained the owners will be forced to shut down the shop. All these things were presented as simple facts; it was left up to the employees to decide what to do. Nobody was told to work for less or perform free overtime, but I wonder what they will decide in the end?

Reductio ad Absurdum's picture

Perhaps your relative should buy the shop, give everybody 30 hour work weeks with early retirement, and make millions of dollars for himself. Easy to be the entrepreneur, right?

Sure, maybe his employer is an evil person who wants to get free work out of his employees while enjoying the fruits of their labor. If that's the case, your relative should definitely quit. But maybe his employer is being honest about the situation, and this is what's needed to compete with cheap foreign labor.

As a white collar worker, my first boss told me to come in 6 days/week but said up front I would get no overtime because I was "salaried." I accepted the job because I liked the work and needed the money, but I'd never do that again... unless I got paid a lot of money.

Zina's picture

The workers are screwed, anyway... Not a matter of being a "good" or "evil" boss. They are screwed. Period.

seventree's picture

No part of my comment called anyone evil or passed judgement. Just another report from the front lines. Make of it what you will.

Zina's picture

Free overtime, I think?

The workers are screwed...

mynhair's picture

Amerika is screwed, make no mistake about it.

Morons to the left of me, morons to the right of me, morons in front of me.

Think I need one o'those old blunderbusses.


mynhair's picture

Amerika is screwed, make no mistake about it.

Morons to the left of me, morons to the right of me, morons in front of me.

Think I need one o'those old blunderbusses.


TBT or not TBT's picture

I think I saw the same cat twice...

MaxPower's picture

Is this the only glitch in the matrix you've noticed???


dumpster's picture

morons standing in my shoes , somebody   stole my shoes honest . 

i left them just over their  by mistake ,, i did not realize the area was consigned for free shoe giveway..  this is the first time i have visited this good will place ,

and it was not until after ,, a clerk told me to keep my shoes on lol

Gully Foyle's picture


Let's hope it will involve kidnap and spectacular bloody revenge.

seventree's picture

Sounds exciting but won't pay the bills, so capitulation is more likely. This sort of thing is happening all over. With enough wage deflation we will eventually be able to compete with third world labor productivity. Workers will put in 12 hour days to feed their family a bowl of rice. Upside: full employment at last.

puckles's picture

Forcing overtime work without compensation is, of course, illegal in this country (although in Asia it's the norm, and often cited as a reason for premature death).  Unfortunately, may companies are now proceeding illegally in many ways against their employees.  My son, 27 and an experienced design engineer, was first forced to live without benefits, and as of three months ago informed that he would be paid under the table entirely.  Eventually the Feds will catch up with his employer, but the latter will be either out of business, or the terminal equivalent. In the meantime, my son will forfeit any possibility of unemployment benefits...He's currently looking for a Fed job...God help us all...

Arkadaba's picture

Actually I don't think that forcing overtime is illegal if you are a salaried worker. But the paying under the table is whole different ball of wax. But your son works in tech. There are jobs out there. I got cold called by three different recruiters last month. I would definitely suggest he start looking. 

And yes working in tech means you sometimes work longer hours especially at a start up (which is why they tend to hire younger workers). I am currently at a start up and sometimes I put in insane hours (and I'm old!). And sometimes I look my sister who went to work for the government straight out of university and I'm a little jealous - her benefits are incredible! But, at the end of the day, she loathes her job and I love mine :) 



AnAnonymous's picture

Dont want to break your spell but could it be that your sister's job is fine and therefore it is easy for your sister to complain about it and that your job is not that fine, making it much less easy for you to complain about it?


Compare: your sister has incredible benefits, you have not. If she keeps telling that her job is fine with that, would she not alienate you? Seems to me just a love strategy. After all, you only have your job when she has her job and her benefits. Your sister might love her job but prefers to lie about it not to alienate it. Not sure she would swap her position with yours. She might just pretend.


Happens quite frequently, depending on how the situation people are allows them to travest the reality.

Usually, people in a very good situation can easily complain about how shitty their situation is, because that is just words, they live a so better reality.

People having to endure a very hard situation cannot afford to complain how shitty their situation is (especially when they cannot escape it) because this would finish to kill them. Just mental protection mechanics.


TBT or not TBT's picture

"Eventually the Feds will catch up with his employer, but the latter will be either out of business"

Who knows, maybe the feds will go out of business first.  There are already wide swaths of federal law they choose not to enforce anyway.  Maybe a little budget cutting apocalypse a few years from now, or a straight consumption based tax system, will cut them seriously down to size.

Henry Chinaski's picture

The trend around here is that people are working 2x for .5x money compared to three years ago.  They are small business owners, on commission, etc. 

People are also drinking mostly 2x these days.

dumpster's picture

...exicans also after hours run the  many  independent taco shops ,, where three for a buck tacos are coming back to life .

working off the books also save the laborer his share of fica, and other overhead ,

he has just found a way to get  resourced over sea pay,, here in america ,, and take home more than his american peers,

is not america great ,, allows for contract labor . 

and the local business can compete with walmart





cyberseer's picture


i believe it is intentional and malicious. why?

because we saw that the US used its propaganda machine against Toyota. We also saw that Wall Street is very complicit in the blow up of Europe debt, having hidden the debt with new "financial instruments".

Basically the US is going rogue and is attacking its allies economically to salvage the situation at home.

Henry Chinaski's picture

I was totally surprised by the govt attack on Toyota; thought it would be Ford.