David Stockman's "Born Again Jobs Scam": The Ugly Truth Behind "Jobs Friday"

Tyler Durden's picture

Submitted by David Stockman via his Contra Corner blog,

The mainstream recovery narrative has an astounding “recency bias”. According to all the CNBC talking heads, the 192,000 NFP jobs gain reported on Friday constituted another “strong” report card.

Well, let’s see. Approximately 75 months ago (December 2007) at the cyclical peak before the so-called Great Recession, the BLS reported 138.4 million NFP jobs. When the hosanna chorus broke into song last Friday, the reported figure was 137.9 million NFP jobs. By the lights of old-fashioned subtraction, therefore, we are still 500k jobs short—notwithstanding $3.5 trillion of money printing in the interim.

The truth is, all the ballyhooed “new jobs” celebrated on bubblevision month-after-month have actually been “born again” jobs. That is, jobs which were created during the Fed’s 2002-2007 bubble inflation; lost in the aftermath of the September 2008 meltdown; and then “recovered” during the renewed bubble inflation now underway.

Stated differently, back when the NFP jobs count first clocked in at 137.9 million in the fall of 2007, the talking heads assured us that we were in a permanent “goldilocks economy” thanks to the brilliant management skills of the Fed. So here we are nearly 7 years later, still a half million jobs short, and the talking heads are gumming once again about the same old illusory “goldilocks”. Who actually pays these people to bloviate!

Setting aside the utterly superficial recency bias, its not hard to see the dire reality lurking in the actual trends. To be precise, 75 months into the post-2000 cycle the US economy had generated 5 million net new jobs—that is, it was way above its prior high water mark.  Likewise, 75 months on from the 1990 peak, it had produced 10 million net new jobs.

So the fact that we are still in negative jobs territory this far into a recovery cycle is literally off-the-historical-charts. And the fact that we are already in month 57 of this business expansion when the ten expansions since 1950 have averaged only 53 months in duration is even more telling. Notwithstanding Bernanke’s hubristic proclamation of the Great Moderation, the Fed has not abolished recessions—so this time the cyclical clock may run out long before many actual “new jobs” are created.

Indeed, by any reasonable standard, an economy which has gained 10 million new working age citizens during the past 7 years, but has generated not a single net new NFP job is failing badly. The Friday report, like the dozens before it, should have been a cause for alarm, not celebration.

In fact, the true story is even worse for two reasons. First, as shown below the quality-mix of even these “born again” jobs has deteriorated sharply. Secondly, the 7 million jobs that were recovered since the official recession bottom in June 2009 had virtually nothing to do with the massive money printing campaign of the Fed or, for that matter, the rest of the Washington stimulus spree of bailouts and boondoggles.

Consider first the quality deterioration, and the fact that when it comes to economics the proper metric is surely not one-job-one-vote. About half of the jobs in the NFP consist of “breadwinner” jobs in the core sectors—–manufacturing, construction, the white collar professions, FIRE, transportation and trade, information services and media and business management and support services.  According to the BLS establishment survey data, these positions generate an annualized pay rate of about $45k—-marginally enough to support a family in many areas of the country.

As shown below, the Breadwinner Economy has been trending south for this entire century! There were 72-73 million of these jobs in 2000; no growth happened during the entire Greenspan Bubble; a thundering collapse occurred during the Great Recession; and there has been only a tepid, fractional recovery since. In fact, among the 5.7 million Breadwinner Economy jobs lost by the time the recession officially ended in June 2009—- only 37 percent have been recovered during the nearly five years since then. And that’s notwithstanding the ritual proclamations about “progress” on each and every “Jobs Friday”.

Breadwinner Economy - Click to enlarge

Breadwinner Economy – Click to enlarge

As shown below, jobs in the Breadwinner Economy pay 2.5X those in the Part Time Economy and 30% more than the HES Complex. So the implications for economic growth and living standards are self-evident. The Breadwinner Economy with half the NFP jobs accounts for more than two-thirds of aggregate wage and salary income. Accordingly, it is not surprising that the real median household income has fallen 7% since 2000. The breadwinner jobs which support it have trended sharply downward and today clock in at only 68.3 million—a level that was first reached during Bill Clinton’s second term.

Yes, there has been some recovery since the recession bottom, but the rate of gain has been tepid and underscores the borrowed time point. At the rate of recovery since June 2009—-about 37,000 per month—it would take until 2024 to get back to the 73 million Breadwinner Economy jobs posted at the time that Florida’s hanging chads were being recounted after the 2000 election.

Digging deeper into the Breadwinner Economy only darkens the picture. The very highest paying jobs in this broad category are in the “goods-producing” sector— construction, mining/energy and manufacturing. The NFP count for goods-producing industries in 2000 was 24.6 million. By contrast, the number reported last Friday was 18.9 million—-23% below its level 14 years ago.

And don’t look for the gap to be filled any time soon. Only 9,000 jobs per month have been created in good-producing since June 2009. So by the lights of pure arithmetic, it would take until the year 2067 to regain the January 2000 high water mark!

Another big chunk of the Breadwinner Economy jobs is accounted for by what we have termed “Core Government” jobs, and it includes employment at all levels of government excluding the Post Office and Education. There were 11 million of these jobs–paying upwards of $60,000 on average— in Friday’s report and that is virtually the same figure reported for December 2007.

So we are at “peak jobs” in the Core Government sector, and if anything the number of these high paying jobs will also shrink during the years ahead. That prospect is owing to the inexorably tightening fiscal vice in which the public sector is now impaled. To wit, the massive growth of transfer payments due to baby boom retirements and the failed economy’s pressure on the safety net is squeezing out all other government spending—-and most especially jobs-intensive public sector service delivery. On the other side of the ledger, publicly-held debt of government at all levels is nearly $16 trillion or 95% of GDP and rising rapidly. This means that spending growth to hire more bureaucrats will be virtually impossible—-even with borrowed money.

That leaves about 38 million jobs in all the other Breadwinner Economy industries mentioned above such as FIRE, trade and transportation, business services etc.—a category we have termed “core private business services”.  Even here, the March print was still 425,000 below the December 2007 peak, and, more importantly, still less than 4% above its turn of the century level of 37 million jobs. Stated differently, this category is the only part of the Breadwinner Economy which has been growing, but the rate of job creation over the last 14 years has been just 8K per month.

And this points to the real scam embedded in the “Jobs Friday” celebrations. Overwhelmingly, the job count gains being reported are in the Part Time Economy.  This category encompasses about 38 million NFP jobs, and consist of bell-hops, bartenders, waiters, maids, nail salons, shoe repair, street vendors, retail clerks, temp jobs and the like. According to the BLS data, these categories generate an annual full-time pay equivalent of just $20,000. These are ”survival” jobs at best, yet they account for fully one-half of all the born again jobs reported since June 2009 (3.4 million out of 7 million).

Part Time Economy - Click to enlarge

Part Time Economy – Click to enlarge

Unlike the Breadwinner Economy, this sector has recovered its December 2007 high water mark of 37.2 million jobs and then some. Last Friday’s report showed 38.1 million jobs in the Part Time economy for a net gain of about 3% over the past seven years. Yet even here the story is hardly reassuring. To be precise, the Part Time Economy has gained  915,000 jobs since December 2007 and 968,000 of them—more than 100%– have been in bars, restaurants, resorts, race tracks, theme parks and other places of amusement.

In short, what has materialized is a Bread & Circuses economy. The BLS category containing the above industries, called “leisure and hospitality”, posted 11.7 million jobs in January 2000. The figure for March 2014 was 14.5 million. Thus, Bread & Circuses accounted for fully 40% of the entire total of 6.9 million NFP jobs created in the American economy during the 21st century.

The balance and then some is attributable to the final broad NFP category we have labeled the HES Complex, which consists of health services, education in both private and public sector and social services including day care. As shown below, this has been the growth engine of the NFP. The 31.5 million jobs in the HES Complex reported for March 2014 represented a 2.3 million gain from the December 2007 peak, and a gain of 6.8 million jobs or nearly 30% from January 2000.

Yet there are more than a few skunks in this woodpile, as well.  Nearly 75% of the gain in HES Complex jobs this century occurred before December 2007. That robust gain of 4.9 million jobs, however was heavily concentrated in education, nursing homes, hospitals, home health care and social assistance—which accounted for 80% of the pick-up. The common characteristic of these categories is obviously that they are heavily fiscally dependent. With the exception of hospitals, all of these categories derive 75% or more of their revenues from local, state and Federal coffers, and even in the case of hospitals, Medicare, Medicaid and other public programs account for upwards of one-half of receipts.

Needless to say, the fiscal vice has been tightening steadily ever since the financial crisis. Accordingly, education jobs have been flat since December 2007 and hospital and nursing homes employment has risen at only a 1% annual rate. Overall, the rate of HES Complex job growth has thus slowed sharply—-from 51K jobs per month during the Greenspan Bubble to 43K per month during the Great Recession to just 26K since June 2009.

Health, Education, and Social Service Complex Jobs - Click to enlarge

Health, Education, and Social Service Complex Jobs – Click to enlarge

Not only has the rate of HES job growth slowed markedly in the face of peak fiscal debt, but even the job growth that has occurred has been in the lowest paying parts of the sector. That is, the gains have not been among doctors, skilled nurses or medical technicians. In fact, about 1.2 million or 80% of the HES Complex job gains since June 2009 have been among home health aids, day care workers and nursing home staff. Increasingly, what is left of the HES Complex growth machines amounts to a Bed Pan, Home Companion and Baby Sitters Brigade.

Indeed, annual pay rates for the entire HES Complex average just $35,000 according to the BLS data. Obviously, the growth in recent years has been among categories where compensation is substantially lower.

So this is what the Hosanna Chorus is celebrating—-a job machine that is broken and generating part-time and low-end positions that still do not add up to the 2007 high water mark. Moreover, as will be shown in the next installment, the Fed’s furious money printing has had  virtually no role in generating even the “born again” jobs which have been so joyously welcomed on Jobs Friday.

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TeamDepends's picture

Grandmother (reading a letter Navie sent his family): My dear family, guess what. Today I found out what my special purpose is for. Gosh what a great time I had. I wish my whole family could have been here with me. Maybe some other time as I intend to do this a lot. Every chance I get. I think next week I'll be able to send some more money as I may have extra work. My friend Patty promised me a blow job. Your loving son, Navin. (she stops reading) And he's got the kisses here.

Four chan's picture

david, nothing matters but the fed aka the great oz.

HardlyZero's picture

and Blowin' Bubbles Yellin'

starman's picture

How a bout  this 20% of the jobs from 08 are gone! 

cdm's picture

the "born again" jobs is still too innocent ...


there ought to be something unholy about the term.


how about:

"the returned" jobs



those jobs are F'd up, bro ...

kliguy38's picture

You mean the "CNBS Circle Jerk Report"

Berspankme's picture

The Sorkin blows Zandi report or Liesman cornholes Kernan report. Take your pick

Bunga Bunga's picture

Unemployment rate, LOL.

Algosaurus Rex's picture

Time to raise rates, burst the speculative bubble, and encourage savings and capital formation. That's where the real jobs will come from...eventually. Or we can all continue drinking the change-we-can-believe-in Koolaid.

Berspankme's picture

Population increase since 2007?? And we have less jobs? Fucking Brilliant

LetThemEatRand's picture

It's really important that both Stockman and Paul Craig Roberts -- two conservatives who served under Reagan -- are plainly calling out offshoring of jobs as one of the roots of our current economic disaster.  The Fed gets a ton of credit for papering over the consequences (by design) and Stockman/Roberts rightly call out the Fed for its role, but it's refreshing to say the least to see these guys call a spade a spade when it comes to the insane policy of encouraging large companies to send manufacturing jobs overseas for short-term profit, while MSM tells us day in and day out that "free trade" is a good thing.   Roberts goes even further and openly calls out the offshoring/Fed papering policies as being part of a deliberate plan for New World Order.  I voted for Perot and wish he'd won.

BandGap's picture

I voted for Perot - twice. Hell, I voted for John Anderson in 1980.

This piece is 15 years too late. The CNBC crowd is just holding the door open for the final exit. All the people carrying water for the thieves expect a place at the table once the dust from the great implosion settles.

This information will be useful if these people are ever brought before the people. That's about it. We went off the cliff months ago.

LetThemEatRand's picture

I agree.  The damage is done and only a major Depression (one where the majority of current middle/upper-middle class lose everything) will wake up the sheep.  At least PCR and Stockman are speaking the truth and giving voice to guys like me who are otherwise branded as Marxist for being against labor arbitrage.

Ned Zeppelin's picture

Actually the most recent coup d'etat was engineered by the Great Traitor Hank Paulson, with his sidekicks Timmuh and Ben.

Ying-Yang's picture

Right on Ned...

Hankie Spanky crossed the line with 700 billion bank bailout with congressional approval

Bushie did much the same when declaring the war on terror

2 events that stick in my mind as turning points

HardlyZero's picture

Inception.  What/when is the "kick" in this slow-mo zero (ZIRP) gravity free-fall ?

moneybots's picture

"I voted for Perot and wish he'd won."


Perot didn't want to win, which is why he pulled out of the race when his support reached 20%.  When his numbers dropped back down, he jumped back in the race.



Westcoastliberal's picture

You probably weren't alive back then at least developed to adulthood.  I remember it differently.

Totentänzerlied's picture

"are plainly calling out offshoring of jobs as one of the roots of our current economic disaster. "

And in so doing, making fools of themselves, that is, betraying how little they understand. By similar reasoning, I guess the USSR was an economic utopia seeing as it didn't outsource virtually a single job in its entire existence? Ever heard of the Democratic People's Republic of North Korea, they're following a strict no-outsourcing policy too. So yeah, if we ignore every other factor and abandon logic and rationality, and causality too, it makes perfect sense.

Berspankme's picture

can't outsource what you never had. We had it and prosperity in the middle class and gave it away

Grouchy Marx's picture

And so, tell me what jobs China has outsourced to the world? By your reasoning China should be the poorest nation, rather than the richest. You are confusing off shoring with trade.

Westcoastliberal's picture

Couldn't agree more and I voted for Perot as well.  Too bad he dropped out but that's what happens if you challenge the system; the Oligarchs put the fear of God in you.

10mm's picture

Davie. Were fucked and we know it. 

JR's picture

Shadowstats Reports:

No. 616: March Employment and Unemployment

April 4th, 2014

• March Payroll Jobs Increase of 192,000 Was Bloated Heavily by Concealed and Constantly-Shifting Seasonal Adjustments
• Payroll and Unemployment Numbers Remain of Horrendous Quality, Generally Not Comparable With Earlier Reporting
• March Unemployment: 6.7% (U.3), 12.7% (U.6), 23.2% (ShadowStats)
• Year-to-Year M3 Growth Rose to 3.7% in March


No. 615: February Trade Deficit and Construction Spending April 3rd, 2014

• Trade-Deficit Deterioration Should Hit First-Quarter GDP Growth Hard • Real Merchandise Trade Deficit on Track for Worst Quarterly Showing Since Fourth-Quarter 2012 • February Construction Spending Showed Ongoing Stagnation More ...

No. 614: SPECIAL COMMENTARY (Revised No. 587 of January 7, 2014) April 2nd, 2014

Extremely Difficult Circumstances in the Year Ahead: Confluence of Economic and Systemic Crises Should Intensify • With Global Confidence in Dollar Rattled by Uncontrollable Fiscal and Monetary Excesses, U.S. Government and the Federal Reserve Have Limited Options to Address Panics • Heavy Selling of U.S. Dollar Remains Likely Proximal Trigger for Inflation Pick-Up • Developing Hyperinflation Would Push Ongoing Recession into Deep Depression • Physical Gold Remains Primary Hedge for Preserving Wealth and Assets

El Hosel's picture

All your numbers are propaganda, all your markets are rigged, all your Leadership are not.

bearwinkle's picture

All your numbers are irrational, all your markets are fake, all your leadership are psychopaths.

Algosaurus Rex's picture




I Write Code's picture

Also the "good" jobs in STEM pay about 50% less in constant dollars today than in 1999, and about 66% less than in 1989.  And now the Republicans want to push for *more* H-1B, which is one of the main causes in the decline: replace one American making $300,000 with two H-1Bs each making $100,000, and the American on welfare or greeting shoppers at Walmart.  We really want more of that?

Grouchy Marx's picture

Agreed. 21% of STEM jobs are held by foreign born individuals. That puts enormous downwards pressure on wages for technical workers. Also why big business constantly lobbies Congress to expand the H1B quotas.

TeraByte's picture

Add to this mess RUB and CNY petro trade striking into the very foundation of federal finances. You have to start a war to boost the employment.

dutchTender's picture

 fracking responsibily would create a shit load jobs. from safety, regulation enforcement, to equipment manufacturing to RD research for safeer techinques ..+plus testing ...


10mm's picture

Fracking regs. Their already bought off.

dutchTender's picture

we need innovations, innovation create jobs. artifically low interest rates just distort risk, that plus inherirant greed(guilty as charged) ..just a recipe for disaster and creates no jobs

i feel like the president's plan for this "slack in the labor force" is WW3. a draft will solve that "youth un-employment" problem ... that as noted on zero hedege, that wil be the perfect time to mandate everyone to convert their 401k and IRA to myRA holding 100% 30 yr treasury ... cause some one needs to buy the treasuries notes that the russians and chinese whom are not buying anymore ....due to WW3. but lets hope that doesnt happen.

Wilcox1's picture

David, What should we do?

GeorgeHayduke's picture

I' stay as far away as I can from born again jobs, just like I try to do with born again people.

alfred b.'s picture



 HOPE that the sheeple will remain asleep & CHANGE is the amount of nickels & dimes left in our pockets once they're done ripping us off.


snakedogs's picture

Be aware of the warning signs. Arm yourselves, trade most of your liquid assets for metals (or it will become Obama's travel funds), have the "bug out bag" ready, know what you are doing and where your are going (establish "roots" there). I there and ready!

Handful of Dust's picture

I asked my lawn guy about 'unemployment' in the Mexican community and he looked at me like I was crazy. He said no one is unemployed there. Most work 16 hour days, he said. "There's plenty of work," he said.


Aussiekiwi's picture

If you want to keep your $5 an hour you can keep your $5 an hour job.

kurt's picture

I called for two weeks trying to get an estimate on a tree removal. One guy came out. I said ok, waited a week, no show, wanted to come 7 days later. I fired him. Another came out he was 3x's as expensive. The guy who gave the estimate was bleeding after running a hedger over his thigh. Another guy said he'd be out in a few hours, never came. He wouldn't even answer my call so I could cancel.

Then I called a Mexican guy. He came out in two hours, on time, gave a very decent estimate. Happily I added multiple other tasks to the job. He came out the next morning with one helper and all the equipment. It was done by noon! He was born in the Sonora Desert, had no electricy as a child.

From our conversation I could tell that he valued honesty and family above all else.

ebworthen's picture

And no one cares if they are here illegally.

An acquaintance has been here 10 years, working various jobs that require I.D., not construction or landscaping.

He just got hired on to work the oil fields in North Dakota, so when you see Cramer say "American Jobs" he is being disingenuous at the least.

besnook's picture

all the mexicans i have hired have worked their asses off without complaint. the best kind of employee.

JR's picture

To wit, the massive growth of transfer payments due to baby boom retirements and the failed economy’s pressure on the safety net is squeezing out all other government spending. —Stockman

It seems to me the Oligarchs-in-Charge are deliberately “squeezing out” the baby boomers because it might keep them from getting a full plate of America’s treasure.

The Associated Press wrote on August 07, 2012:

People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It's a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press.

Zero Hedge documented on April 7, 2014:

the “Government Confiscation And Lifting The Veil on the 401(k) Scheme,” a mini-documentary video confirms Jim Rogers' fear that ‘they won’t take our bank accounts...they will take our retirement accounts,’ is coming true.”

Then, teslaberry, apparently at the end of his tether, pounded back from his keyboard: THEY ARE TAKING YOUR RETIREMENT ACCCOUNTS ALREADY; IT’S CALLED ZIRP!!!!



Teslaberry then goes on to make the charge that scaring people with the “possibility of the U.S. begin “cyprused,” only distracts them from the current UNACCEPTABILITY OF THE CURRENT HOSTAGE CRISIS SLOW BURN THEFT… and should the Cyprus analogy not come to bear, he says, the distraction will be used further to make a point of the critics 'being wrong'. 

Stop predicting “conspiracies about the future which might well be probable,” says teslaberry, and “start focusing on the present where there is outright existing, massive theft, right up in your face.”


Another timely video, “401K Mutual Funds Exposed- Office Series,” reports that for the past decade most mutual funds have been flat, that means that, if you had left your money with them since 2000 you have nothing to show for it, and adjusted for inflation you’d be down 30%. Against inflation you’ve lost money.”


On October 15, 2013, The Senior Citizens League (TSCL) announced:

According to TSCL’s 2013 Survey of Senior Costs, Social Security benefits have lost almost one-third of their buying power since 2000. Since 2000, the COLA increased benefits just 38 percent while typical senior expenses have jumped 81 percent, more than twice as much

I rest my charges.

besnook's picture

eugenics stories and the related arguements may be the ultimate end game to solve the human problem. ebola, anyone?

AdvancingTime's picture

The recently released figures showing a strong decline in job formation over recent months may be more than a noisy statistic it may be an omen of danger ahead. This is a reminder that the task before Janet Yellen and the Federal reserve will be getting much more difficult.

Not only does this call into question claims the economy has reached escape velocity but lends credence to claims by others like me that QE and artificially low interest rates are not the answer. These policies and massive government deficit spending can only carry a distorted economy so far. Expect this issue to come front and center as the Fed come under increased scrutiny and increasing demands to defend their policies. More on this subject in the article below.


Moon Pie's picture

As I rose, I saw myself falling

And all that was is now before me

In it lie vipers and angels and dirt

As I hope to land on the shores of lake Gitche Gumee 

- Some Hobo Sailor

Uber Vandal's picture

Here is another ugly truth:


It would appear that if one does not have a job, one would not need to drive a vehicle to a job that no longer exists, or has less hours than it once did.