For many months, if not years, we have been beating the drum on what we believe is the most hushed, but significant story in the metamorphosis of the US labor pool under the New Normal, one which has nothing to with quantity considerations, which can easily be fudged using seasonal and birth death adjustments, and other statistical "smoothing" but with quality of jobs: namely America's transformation to a part-time worker society. Today, one of the very few economists we respect, David Rosenberg, pick up on this theme when he says in his daily letter that "the use of temps is outpacing outright new hirings by a 10-to-1 ratio." And unlike in the old normal, or even as recently as 2011, temp hires are no longer a full-time gateway position: "Moreover, according to a Manpower survey, 30% of temporary staffing this year has led to permanent jobs, down from 45% in 2011.... In today's world, the reliance on temp agencies is akin to "just in time" employment strategies." Everyone's skillset is now a la carte in the form of self-employed mini S-Corps, for reason that Charles Hugh Smith explained perfectly well in "Dear Person Seeking a Job: Why I Can't Hire You." Sadly, that statistic summarizes about everything there is to know about the three years of "recovery" since the recession "ended" some time in 2009.
From Gluskin Sheff
More on that Payroll Report
The more we sift through it, the more we didn't like it. Even with the bump in June hours worked and average weekly earnings, the reality is that the Q2 results for both slowed markedly. The economy has hit stall speed yet again — the third time in the past three years.
On top of that, some other details in the data were disturbing. The ranks of the unemployed rose 29k on top of a 220k surge in May. Those who were unemployed and just completed temporary work soared 218k after a 137k increase in May to stand at the highest level since November 2010 (right when QE2 began!). The total pool of available labour jumped 258k to 19.3 million which means that there is now but one job opening for every six people out there who are either actively or passively looking for work. No wonder wage pressures are fading fast.
There are some pundits who believe that the +25k pickup in temp agency employment is a good sign since in the past this sector acted as a leading indicator for job creation... if only we can bring back those old days. In today's world, the reliance on temp agencies is akin to "just in time" employment strategies — the use of temps is outpacing outright new hirings by a 10-to-1 ratio. The reality is that few businesses want to commit and this shows through in the Household Survey as well with part-time employment in an uptrend and full-time in a downtrend. Moreover, according to a Manpower survey, 30% of temporary staffing this year has led to permanent jobs, down from 45% in 2011.
As this all relates to the upcoming U.S. election, there are some more interesting tidbits to chew on. Looking at the social groupings in the data, we see that since President °barna moved into the White House in January 2009, the unemployment rate for African Americans has climbed to 14.4% from 12.7%, the unemployment rate for Hispanics has risen to 11% from 10%, the unemployment rate for women has risen to 8% from 7%, and the unemployment rate for youth (20 to 24 years old) has jumped from 12.4% to 13.7%. By and large, these were the segments of the popu}ation that helped President Obama win in that historic election in November 2008. The Reaganesque' question that must be posed is: Are these folks better off than they were four years ago?