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"Jobs Friday": Why Bubblevision Misses The Epic Failure Of The US Labor Market
Submitted by David Stockman via Contra Corner blog,
CNBC’s long-running “jobs Friday” fetish is getting downright appalling. Each month the BLS puts out a treasure trove of data on the rich and complex mosaic of the US labor market - a download that embodies a truly frightening trend of economic failure.
Yet the clowns who assemble in its screen boxes to opine on Hampton Pearson’s 30-second summary of the BLS release never have a clue. In their allotted 15 seconds of fame, they merely bloviate about the single dumbed-down numbee - the establishment survey jobs print - that is the sum and substance of the coverage.
Trained seals would be just as effective: ort! ort! ort!
In any event, within seconds the SPX futures are off to the races, flashing the trading algos’ instant take on what the “print” means for one thing alone. Namely, does it portend continued or even more ease at the Fed and a plentitude of juice for Wall Street speculators.
Last Friday CNBC inadvertently indicted it own pandering when the winner of its “pick the number” contest hit 142,000 jobs right on the head, making a mockery of the 200-250k consensus range that had issued from the “experts”. The winning viewer’s name was Ronnie Squires, who described himself as “retired” and the owner of a (very) small business in which he occasionally transports in his pick-up unwanted cats and dogs to new out-of-state “homes” for friends. Along the way, he does his own jobs survey:
“I do a lot of traveling around the country and there’s still a lot of folks who say ‘there’s no jobs out there’.
I watch [CNBC] every day and I just don’t see it.
I don’t know if the people on Wall Street are not really getting out and seeing what’s really going on [in America].
When you go to small towns, like I do, and talk to people – people don’t have much confidence in the numbers you hear.“
In a few deft seconds, a “no jobs” nobody who apparently doesn’t actually have one himself, essentially explained the contents of the chart below to his silenced CNBC hosts. Over the course of 170 “jobs Fridays” since mid-2000, the latter have apparently never noticed the single most stunning fact embedded in the monthly BLS report. Namely, that outside of health and education there has not been one net new job created in the American economy since July 2000! Yes, not a single new jo - as in none, nein, nichts, nada, zip!
Yes, we do have about 7.3 million more teachers, nurses, home health aides and bed-pan changers - meaning that the total job count in what I have termed the HES Complex (health, education and social services) now stands at 31.7 million compared to 24.4 million in early 2000 (see below). Moreover, since all work is noble - that applies not the least to the labors of those who educate our children and care for the sick.
The point here, however, is about economics, not social worth. And in the realm of economics, the notion implicit in “jobs Friday” - that all jobs are created equal - is simply a fatuous shibboleth.
In fact, the 107 million non-HES Complex jobs shown above can be divided into two categories - part time jobs and breadwinner jobs. Compared to breadwinner jobs which pay about $50,000 per year, the former pay at a rate of about $20,000 annualized, reflecting around 26 hours of work per week and hourly pay of about $14.
Stated differently, the bartender, waiter, bellhop, maid, shoe repair, retail clerk and temp positions reflected in the graph below represent 40% jobs from an economic value perspective. And from a societal angle, they provide no foundation whatsoever on which to support middle-class families and a thriving citizenry.
By contrast, breadwinner jobs in manufacturing, mining, construction, FIRE, transportation and distribution, information technology, the white collar profession and business management do generate the means for at least a minimum standard of living. Unfortunately, the graph shows an awful truth that Steve Leisman and Mark Zandi, the Keynesian statist from Moody’s Economics (who advised John McCain in the 2008 campaign to fold his tent on the abominable Wall Street bailout), have never noticed. Namely, that the US economy has been losing breadwinner jobs at a rate of 18,000 per month for 14 years running.
Taken together, these two charts leave nothing to the imagination. Since Bill Clinton’s last month in office there has been a 3 million or 5% shrinkage of breadwinner jobs. There is nothing like this in modern history, yet the Jobs Friday revelers have always been oblivious to that economically debilitating trend—a harsh reality which massively dwarfs the seasonally maladjusted, continuously revised, heavily imputed and guesstimated monthly noise that is the essence of Hampton Pearson’s summary.
Even when you look at the growth in part-time jobs outside the HES-Complex, the pattern has been volatile and tepid on a trend basis. During the “recovery” since the Great Recession ended in June 2009, for example, most of the gain has consisted of “born again jobs”. That is, two-thirds of the 3.7 million part-time job gains reported since June 2009 were first generated during the Greenspan housing bubble. Needless to say, they were then wiped-out during the Great Recession plunge—- only to be slowly recouped in the 61 months since then as “born again” jobs represented as new hires.
Stated differently, Bernanke boasted in February 2004 that the US economy had entered a period he was pleased to term “The Great Moderation”. But it didn’t exactly work out that way—since just four years later he claimed the nation’s economy stood at the gates of the Great Depression 2.0.
Bernanke’s lack of clairvoyance, however, is not the point here. At least by the lights of the monetary central planners in the Eccles Building, the 14 year since the turn of the century were certainly intended to represent a great moderation. That’s why twice during that period they flooded the financial markets with unprecedented liquidity—–a maneuver designed to flatten the cyclical bottom and ignite the rebound.
Yet what did it do for the non-HES labor market? It did not arrest the trend decline in breadwinner jobs in the slightest. And even in that bleak corner of the economy that I have labeled the part time economy there has been a net gain of just 21,000 per month over the past 14 and one-half years.
That bears repetition. During a decade and one-half, the US economy has managed to generate only 21,000 part-time jobs per month outside the HES Complex. So it might well be well and truly wondered how these people keep putting on their party hats month-after-month.
In the first place, even if you believe that prosperity can be sustained by the vaunted “shop until they drop” American consumer, the pattern shown above doesn’t get the job done by a long shot. The periodic rebirth of a modest quotient of part-time positions paying $20k per year will support robust consumption spending in the current GDP reports only at the expense of ballooning credit losses and over-time work for the repo man down the road.
Apart from this obvious non-starter, there are three specific facets of the American economy’s complete dependence on the HES Complex for job growth sector that are deeply troubling, but have perennially escaped the notice of the Jobs Friday commentariat.
First, nearly all of these jobs are “fiscally dependent” owing to direct government spending, loans and tax expenditures. At present, total government expenditures for Medicare and Medicaid, for example, amount to $1.2 trillion annually and account for well-more than 50% of health service delivery, but upwards of 90% in some areas that are jobs intensive. The 3.3 million jobs in nursing facilities, for example, are almost completely funded by Medicare and Medicaid.
Likewise, the number of home health care jobs has soared by 700k and nearly doubled since the year 2000, but this sector is also heavily dependent upon the two big government programs. At the same time, the tax expenditure each year for employer-based health coverage and individual tax credits and deductions is upwards of $200 billion, meaning absent these fiscal subventions underlying health care expenditures and employment gains would be far lower.
Even in the education sector where 13.6 million jobs were reported for August compared to 11.6 million in January 2000, 75% of this pick-up was in higher education, not K-12; and it goes without saying that the boom in higher education is the direct result of $1.2 trillion in student loans and $40 billion annually in direct grant programs financed entirely by Uncle Sam.
On the margin, all of this fabulous fiscal support for the HES Complex consists of borrowed money—-since if there actually were a balanced budget law that required today’s taxpayers to foot the cost of government rather than the unborn taxpayers of tomorrow, the first thing to be cut would be the giant subsidies being collected by the health and education cartels. In any event, governments are now bumping up against “peak debt”, meaning that the stupendous flow of fiscal resources to the HES Complex is beginning to abate sharply, resulting in a unmistakable slowing in the rate of so-called job creation.
During the Greenspan Boom between 2000 and 2007, for example, the monthly rate of job creation in the HES Complex was 51,000. During the Great Recession that slowed to 43,000 per month; and during the 61 months of recovery since then it has dropped further to just 28,000 per month. In short, the American jobs machine—-tentative as it has been for the past 14 years—-has essentially rested on a fiscal mirage that is now reaching it waning days.
The second disability follows—namely, that HES Complex job growth has nothing to do with monetary policy. There is no way, shape or form by which the Yellen’s Fed’s focus on the labor market, and its determination to keep the lunacy of zero interest in place for what will be 78 month running through mid-2015, actually stimulates activity rates and jobs in the HES Complex.
Overwhelmingly, the hospitals, doctors offices, outpatient clinics, nursing homes, for profit higher ed diploma mills and just plain old public education system do not borrow large amounts of money to operate. They do not care whether the money market interest rate is zero or 5%.
The credit market transmission mechanism for Fed policy is over and done, anyway, because the household sector has reached peak debt, as shown below. But the obvious point is that the HES Complex was never dependent upon cheap interest rates and booming debt creation in the first place. It was about fiscal transfers all along.
In short, the Fed has managed to grow it balance sheet from $500 billion to $4.4 trillion during the period encompassed by the charts above—-and the overwhelming Keynesian rationale has been saving and creating jobs. Yet the only net jobs created in the US economy during this period had absolutely nothing to do with this manic spree of money printing. Would that one of Janet Yellen’s vaunted “dashboards” carried a reminder to that effect.
Finally, there is the issue of productity and paying our bills as a nation. We import about $2.5 trillion per year. That giant inflow of consumer products, capital goods and raw materials has to be paid for out of exports of goods and services— or the shortfall must be borrowed from the rest of the world.
The Keynesian money printers, of course, counsel not to worry, because foreigners are eager lenders to an American nation that has lived beyond its means for 30 years. According to Greenspan, Bernanke, and any random Wall Street economist you might happen to choose, the peasants of Asia who have come out of the rice paddies to earn a meager living in the slave factories of east China have an irrational penchant to over-save and thereby accommodate the $12 trillion debt of the US household sector.
Needless to say, that’s a fairy tale. Sooner or later, the American economy will be forced to import only what its earns in foreign sales and services because the export of excess dollars and debt by the Federal Reserve will be brought to a halt as the global central bank race to the bottom enters its final phases.
In this context, there has self-evidently been no recovery in goods production. As of last Friday’s report, the number of jobs in construction, manufacturing and mining (including energy) had hardly budged from the recession bottom and was down nearly 25% from the level of January 2000.
So at the end of the day, the HES Complex does not help the US economy pay its way. Essentially, America has been creating jobs only by borrowing from the rest of the world—–more than $10 trillion on a balance of trade basis during the last 30 years.
And most certainly, this is a structural barrier to real economic growth and job creation that the revelers on Jobs Friday have never even remotely bothered to note.
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We are a hyperpower now. We create our own reality. If you prefer your own reality, we can drone you straight to heaven to improve it.
BTW, watch out for ISIS terrorists hiding under your bed
David Stockman is now on the Obama financial terrorist list and will be paid a visit by Moochelle soon!
"We are a hyperpower now"
We are a hyperbole now...
I feel that the author was far too kind in their assessment of CNBC management and hosts.
Why isn't the money printing working. Hummm let me see.
Oh ya, if you print 40 Billion a month and have a negative trade balance of 40 Billion a month something tells me the entire 40 Billion is just leaving the country every month. Wait let me check my complex math problem one more time...yup it sure enough is that fucking simple.
Unemployment is a leading indicator in this type of gov
The media told me the jobs number was probably incorrect, but even if it was correct, that signals more accomodative fed policy. I have flow charts if anyone is interested.
Dupe.
What?? That emperor is wearing no clothes??
Corrupt interests = bogus interest rates
No incentives to invest or form new capital
Most profit from stealing more from the helpless masses in need of essential services.....
USA down the tubes until the system is reset (slow demise vs. sharp crisis)
So, don't bother placing your bets
It is over
Education & healthcare. Everyone I know (three cousins, my wife, a half dozen of her friends, etc) have moved from elsewhere to education & healthcare, mostly education. (Teachers, Aides, not "management".
Chasing pensions in one of the last "industries" to offer them.
The government is creating jobs, especially right before the November election. All for perception.
A hollow jobs promise for a hollow jobs future.
I keep telling them those pensions will magically disappear before they ever see a penny, but I suppose they still must try...
FORWARD!
Thanks, I thought this right after I read your first post.
I'm thinking don't buy a home when you are moving somewhere for a "new" job.
"fatuous shibboleth"
Dictionary.... dictionary.... dictionary. Ah, here we go:
Fatuous: silly or pointless. (OK, I knew this one)
Sibboleth: a custom, principle, or belief distinguishing a particular class or group of people, especially a long-standing one regarded as outmoded or no longer important. (Definitely didn't know this one)
Thanks NoDebt. Learn something new every day (on ZH?)
How appropriate to use the word shibboleth.
Hebrew word shibboleth, meaning "flood, stream," also "ear of corn;"
Used to cut down the Sons of Ephraim at one time... Poetic?
https://en.wikipedia.org/wiki/Shibboleth#Origin
http://www.mechon-mamre.org/p/pt/pt0712.htm From Mechon-Mamre:
? ??????????? ???????? ???-??????????? ???????????, ???????????; ??????? ???? ???????? ????????? ?????????, ?????????, ??????????? ??? ????????-??????? ??????????? ??????, ????????? ???. 5 And the Gileadites took the fords of the Jordan against the Ephraimites; and it was so, that when any of the fugitives of Ephraim said: 'Let me go over,' the men of Gilead said unto him: 'Art thou an Ephraimite?' If he said: 'Nay'; ? ??????????? ??? ?????-??? ????????? ????????? ????????, ????? ?????? ???????? ????, ??????????? ??????, ???????????????? ???-??????????? ???????????; ????????? ?????? ??????, ???????????, ??????????? ??????????, ?????. 6 then said they unto him: 'Say now Shibboleth'; and he said 'Sibboleth'; for he could not frame to pronounce it right; then they laid hold on him, and slew him at the fords of the Jordan; and there fell at that time of Ephraim forty and two thousand.ALL new jobs in healthcare and education, while we've got probably the dumbest and unhealthiest people around!
"Overwhelmingly, the hospitals, doctors offices, outpatient clinics, nursing homes, for profit higher ed diploma mills and just plain old public education system do not borrow large amounts of money to operate. They do not care whether the money market interest rate is zero or 5%."
This is Stockman's key observation. The cheap money isn't stimulating enough domestic investment/emplyment growth. And the areas experiencing job growth are less sensitive to the cost of capital.
All that's happened is that savers have been punished so bankers can make more money. It is basically a direct transfer. As a saver, I wouldn't mind so much if some poor slob got a good job along the way. But this hasn't happened.
What makes me laugh is hearing those like GS and JPM all hand wringing about how things are so precarious right now with all the money printing liquidity, while THEY were the ones who engineered it all and scoffed at the 'pessimists'....for fucks sake!
A Dream:
Through some miracle, GS & JPM are destroyed overnight and the FED with them. Just gone, no trace. Suddenly the economy begins to grow again. All by itself.
Very similar to my own dream where an asteroid slams into the Capitol during one of the 10 or 12 days Congress is actually in session and working.
Good read on it, Cap'n. I'll add an observation of my own. With the Fed now serving as a serial bubble creator in ways so obvious, entire webistes are devoted to it (ZH, for instance), you'd have to believe that the captains of industry out there also realize investing in their companies for the long term is perhaps a little too dangerous. Decide to build a new plant or facility or launch into a game-changing R&D project (capital intesive, long pay-back) at the wrong time, and you could easily sink your company.
Cheap $$$$$ is for stock buy backs and acqusitions that destroy competition.
The rest of you can eat shit. You won't be getting $$$$ one.
"During the Greenspan Boom between 2000 and 2007, for example, the monthly rate of job creation in the HES Complex was 51,000. During the Great Recession that slowed to 43,000 per month; and during the 61 months of recovery since then it has dropped further to just 28,000 per month. In short, the American jobs machine—-tentative as it has been for the past 14 years—-has essentially rested on a fiscal mirage that is now reaching it waning days."
Nicely stated Mr. Stockman. Mirage and PT jobs - nice jobs pols and the fed - any doubt that you are NOT the job engine, and that you exist to enrich your masters? So much for your BS - 'dual mandate...'
http://www.chicagofed.org/webpages/publications/speeches/our_dual_mandat...
The Federal Reserve would like to print jobs but it can't.
The Federal Reserve would like to just seize all public wealth and make us all sharecroppers right now, but they just haven't come up with a good enough plan or are too scared to do it.
And the US jobs to India and offshoring continue. Contrary to what bubblevision wants you to believe. Grainger and trading firms as well as other tech companies post job requisitions in India.
Grainger sucks anyway. Fuck Grainger with their asinine TV ads. Turd suckers.
good morn all..
hope ur enjoying the erasure of losses in the equity indexes occurring yet again in the last hour of trading in London...
and how r u enjoying the smack down in the Gold and Silver phony paper markets that begin on the open in London and NY that is continuing into the London close as well...
$18 Silver prices....what a fucking joke...
i will continue stackin until the death...
peace out homies......
I searched back for the big stories on the jobs report from the year 2006, where the number of jobs added ranged from 2k to 315k.
I could not find much, but what I did find was a far cry from the importance or hoopla surrounding this number that we see today.
I believe all the conversations around the jobs number to be a diversion from the real issue at hand.
The economy sucks, and the Federal Reserve Bank is making it worse.
We are not allowed to discuss how bad it really sucks as long as the numbers are positive.
Turn instead to the rate of Corporate Profit growth for American busiinesses after taxes overall. That number is negative for the last twelve months. Shouldn't this really be what matters?
After all, why are these people in business in the first place?
To generate profits.
So if the economy is really improving, why aren't more companies than the Dow 30 and the SP 500 prospering? Why are all the mom and pop businesses taking it up the arse?
They cannot hold on much longer, despite all the QE that has been thrown into the system.
because 6 years into this shit show it is supposed to be getting better. It isn't. And it won't.
All of these problems are because America is a nation of selfish, unpatriotic hoarders.
-or at least it was last week..
The Federal Reserve will soon run out of anyone with a pulse that can take on more debt. Withe the Federal Reserve it's debt to infinity.
Housing bubble #2 is rolling over.
Either we're all mad here , or that ASYLUM out there is just MASSIVE.
"Shibboleth", nice word.
But adding more teachers to 'educate' our children is hardly helping matters, since public school teachers are one of the lowest performing job classes in the world. Let's leave out for a minute whose fault it is or which combination of nature/nuture/lousy parents/criminally oriented peer groups/bullying and all the other variables that can be cited as the causes of such dismal outcomes in our schools. The fact is that for the money paid the value is abysmally low.
Teachers are one of the most overpaid, (two public school teachers can retire with cloase to $4,000,000 dollars in pensions and benefits for utter failure, like the jewish banksters in Jew Nork) groups we have in existence, never compenated for their results, but for their tenure.
"I don’t know if the people on Wall Street are not really getting out and seeing what’s really going on [in America]."
"I watch [CNBC] every day and I just don’t see it."
That is not in their job description.
Tokyo Rose at CNBC will not escape justice.
yep, gainfully employed since the 1970's until 2012. Move to start over, no full time jobs, part time only, and had to bite the bullet and work for the gov now, it is now survival.
Reading these continual posts about "job creation". is like watching y'all perform an autotopsy on an animal that has been blown apart. What's the point??
"Peak Jobs" in the private sector (public is another matter entirely) was reached in the early '80s for human beans not entering the 'growth industry' of high (read: fantasy Finance) finance. Since then the consolidations of corporations, thru LBOs, Mergers, Acquisitions, and the rest of the buyouts for 'paper' (notice no PMs were (are) used in these transactions) a la Dennis Kozlowsky, have only hastened the retreat of careers in so many fields it is mindboggling, while the global population has increased by a half billion.
Resign yourselves to the fact that examining the entrails of BLS stats and all the commentary that surrounds it is a total waste of bandwidth.
The narrative needs to change to begin entertaining the reality of a world where work disappears and the time man has on earth will need to be spent in ways that do not use his time to earn a living but instead is given the basics for survival at a fairly low level, and only the most creative, inventive, and savants will have a better life.
Europe Peoans and Asians realize this and have consciously stopped having children who will only make matters worse. It will be many generations b 4 there is an actual shortage of people to do the availiable work, and governments will need to do an FDR, whose make-work projects will be paid for with newly minted FRNs, make transfers of that cash to the people as a Minimal Income for essentially doing nothing but are instead paid to STAY OUT OF THE WORK FORCE.
Look at other failed empires to see how their people are faring and have fared in the aftermath of peak employment. Britain, Spain, and Egypt are all struggling with post-empire ennui and have been a hundred years. The U.S. is on a trajectory that is a clone of theirs.
What the hell is Stockman moaning about. Take a break already. Work sucks dude.
Not to nitpick here, as I know nobody likes a Grammar Nazi, but in this case I think it's necessary to point out it's Steve LIESman, not Leisman.
Both spellings = brainless twat/puppet
Propaganda spewing waste of oxygen
"but its only temporary, everybody knows that....."
The slow downward spiral will go on for years! There is so much electronic currency in the world that the game can be supported with a few key-strokes.