Jobs Report Blues — Paul Craig Roberts
April 2, 2016 | Original Here | Use original and sign up at the bottom if you wish to receive his newsletter via email
Jobs Report Blues
Paul Craig Roberts
On Friday the Bureau of Labor Statistics reported that there were 215,000 new jobs in March.
John Williams of ShadowStats.com reports that these “new jobs” result
from the the Birth-Death model that “artificially inflates headline
month-to-month payroll gains with add-factors that currently average
well in excess of 200,000 jobs per month.”
In other words, the jobs are the product of a model’s assumption that
unreported new start-ups created 200,000 more jobs than unreported
business failures lost.
To look at the jobs report in a different way, assume March did bring
215,000 new jobs and ask, “which sectors had jobs gains?” The answer
is the same as has been the case since I began years ago reporting on
the payroll jobs report:
Retail trade accounts for 47,700 of the jobs.
Health care and social assistance account for 44,000 of the jobs.
Waitresses and bartenders account for 24,800 of the jobs.
Manufacturing lost 29,000 jobs.
Part-time jobs without benefits comprise a rising percentage of US employment.
In the 21st century the main source of corporate profits has been
lower labor costs achieved by offshoring US jobs and by bringing in
lower-paid foreigners on work visas. This practice stopped the growth
of US real median family income. Federal Reserve policy kept consumer
demand alive by expanding consumer credit, which substituted a rise in
consumer indebtedness for the missing growth in consumer income. Today
the growth of consumer credit is limited by the absence of income growth
to service the debt.
In short, corporations maximized short-run profits by ruining their
domestic consumer market along with the personal income and sales tax
base for government. It is unclear that this extraordinary mistake can
be unwound.
Update to BLS December Payroll Jobs Report: It is even worse than I reported —
Paul Craig Roberts
January 9, 2015 | Original Here Go here to sign up to receive email notice of this news letter
Update to BLS December Payroll Jobs Report: It is even worse than I reported
Paul Craig Roberts
In my column on Friday I reported the unreported facts in the payroll jobs report. http://www.paulcraigroberts.org/2016/01/08/another-fabricated-jobs-report-paul-craig-roberts-2/
If we choose to believe the report, it is really very bad news. Good
middle class jobs are continuing to decline. The new jobs are jobs that
pay considerably less and often are part-time jobs devoid of benefits.
Moreover, the new jobs are going to people outside the prime working
age. The unavoidable conclusion is that for the majority of Americans,
economic prospects are declining.
There is more bad news to be added to this dismal picture. The
payroll jobs report provides both the actual numbers of jobs from the
survey and the seasonally adjusted number. The news release is always
the seasonally adjusted number, which is the number that my column
examines. However, the seasonally adjusted number is concocted.
In past reports I have explained that the BLS has a birth-death model
that assumes new unreported jobs from new business startups exceed
unreported jobs losses from business failures. John Williams
(shadowstats.com) has shown that over-estimates from this model can add
750,000 non-existant jobs to the reported annual payroll jobs increase.
Seasonal adjustments can have the same effect. For example, the
actual reported gain in new payroll jobs prior to seasonal adjustments
was only 11,000. The seasonally adjusted gain was 292,000. In other
words, seasonal adjustments accounted for 281,000 of the 292,000
reported jobs. There is a case for making seasonal adjustments, but not
when seasonal adjustments account for 96% of the jobs gain. http://www.bls.gov/news.release/empsit.t17.htm
Probably what we are observing is that the economic house of cards
that the Federal Reserve has constructed together with financial
deregulation depends heavily on reported jobs gains for its stability,
and this stability is provided by the use of the birth-death model and
seasonal adjustments to produce reassuring payroll jobs numbers.
As I have pointed out in numerous columns, if the reported jobs
claims were real, the labor force participation rate would not be
declining. If the reported jobs claims were real, people would be
entering the work force attracted by employment opportunities. They
would not be leaving the work force from discouragement and frustration
in finding employment.
The Obama regime’s claim that the declining US labor force
participation rate is the result of rising retirements is contradicted
by the fact that the reported payroll jobs gains are primarily accounted
for by the oldest age group, 55 and higher.
I am left with the conclusion that the 281,000 jobs produced by
seasonal adjustments are the product of the misuse of seasonal
adjustments in order to keep alive the appearance of economic recovery.
Keep in mind, also, that payroll jobs are the number of jobs, not the
number of employed people. Many payroll jobs are part time with two or
more being held by one person.
Another Phony Payroll Jobs Number — Paul Craig Roberts
November 6, 2015 | Original Here Go here to sign up to receive email notice of this news letter
Another Phony Payroll Jobs Number
Paul Craig Roberts
The Bureau of Labor Statistics announced today that the US economy
created 271,000 jobs in October, a number substantially in excess of the
expected 175,000 to 190,000 jobs. The unexpected job gain has dropped
the unemployment rate to 5 percent. These two numbers will be the focus
of the financial media presstitutes.
What is wrong with these numbers? Just about everything. First of
all, 145,000 of the jobs, or 54%, are jobs arbitrarily added to the
number by the birth-death model. The birth-death model provides an
estimate of the net amount of unreported jobs lost to business closings
and the unreported jobs created by new business openings. The model is
based on a normally functioning economy unlike the one of the past seven
years and thus overestimates the number of jobs from new business and
underestimates the losses from closures. If we eliminate the
birth-death model’s contribution, new jobs were 126,000.
Next, consider who got the 271,000 reported jobs. According to the
Bureau of Labor Statistics, all of the new jobs plus some—378,000—went
to those 55 years of age and older. However, males in the prime working
age, 25 to 54 years of age, lost 119,000 jobs. What seems to have
happened is that full time jobs were replaced with part time jobs for
retirees. Multiple job holders increased by 109,000 in October, an
indication that people who lost full time jobs had to take two or more
part time jobs in order to make ends meet.
Now assume the 271,000 reported jobs in October is the real number,
and not 126,000 or less, where are those jobs? According to the BLS not
a single one is in manufacturing. The jobs are in personal services,
mainly lowly paid jobs such as retail clerks, ambulatory health care
service jobs, temporary help, and waitresses and bartenders.
The new reported jobs are essentially Third World type of jobs that
do not produce sufficient income to form a household and do not produce
exportable goods and services to help to bring down the large US trade
deficit resulting from jobs offshoring.
The problem with the 5% unemployment rate is that it does not include
any discouraged workers. When discouraged workers—those who have ceased
looking for a job because there are no jobs to be found—are included
the unemployment rate is about 23%.
Another problem with the 5% number is that it suggests full
employment. Yet the labor force participation rate remains at a low
point. Normally during a real economic recovery, people enter the labor
force and the participation rate rises.
The bullion banks acting as agents of the Federal Reserve used the
phony jobs number to launch another attack on gold and silver bullion,
dumping uncovered shorts into the futures market. The strong jobs number
provides cover for the naked shorts, because it implies an interest
rate hike and movement out of bullion into interest bearing assets.
If the US economy were actually in economic recovery, would half of
the 25-year-old population be living with parents? The real job
situation is so poor that young people are unable to form households.
See: http://www.paulcraigroberts.org/2015/10/29/us-on-road-to-third-world-paul-craig-roberts/
Virtual Economy’s Phantom Job Gains Are Based on Statistical Fraud — Paul Craig Roberts
July 7, 2014 | Original Here Go here to sign up to receive email notice of this news letter
Virtual Economy’s Phantom Job Gains Are Based on Statistical Fraud
And More Fraud Is in the Works
Paul Craig Roberts
Washington can’t stop lying. Don’t be convinced by last Thursday’s
job report that it is your fault if you don’t have a job. Those 288,000
jobs and 6.1% unemployment rate are more fiction than reality.
In his analysis of the June Labor Data from the Bureau of Labor Statistics, John Williams (www.ShadowStats.com)
wrote that the 288,000 June jobs and 6.1% unemployment rate are “far
removed from common experience and underlying reality.” Payrolls were
overstated by “massive, hidden shifts in seasonal adjustments,” and the
Birth-Death model added the usual phantom jobs.
Williams reports that “the seasonal factors are changed each and
every month as part of the concurrent seasonal-adjustment process, which
is tantamount to a fraud,” as the changes in the seasonal factors can
inflate the jobs number.
The monthly unemployment rates are not comparable, so one doesn’t
know whether the official U.3 rate (the headline rate that the financial
press reports) went up or down. Moreover, the rate does not count
discouraged workers who, unable to find a job, cease looking. To be
counted among the U.3 unemployed, the person must have actively looked
for work during the four weeks prior to the survey. The U.3 rate
automatically declines as people who have been unable to find jobs cease
trying to find one and thereby cease to be counted as unemployed.
There is a second official measure of unemployment that includes
people who have been discouraged for less than one year. That rate,
known as U.6, is seldom reported and is double the 6.1% rate.
Since 1994 there has been no official measure that includes
discouraged people who have not looked for a job for more than a year.
Including all discouraged workers produces an unemployment rate that
currently stands at 23.1%, almost four times the rate that the financial
press reports.
What you can take away from this is the opposite of what the
presstitute media would have you believe. The measured rate of
unemployment can decline simply because large numbers of the unemployed
become discouraged workers, cease looking for work, and cease to be
counted in the U.3 and U.6 measures of the unemployment rate.
The decline in the employment-population ratio from 63% prior to the
2008 downturn to 59% today reflects the growth in discouraged workers.
Indeed, the ratio has not recovered its previous level during the
alleged recovery, an indication that the recovery is an illusion created
by the understated measure of inflation that is used to deflate nominal
GDP growth.
Another indication that there has been no recovery is that Sentier
Research’s index of real median household income continued to decline
for two years after the alleged recovery began in June 2009. There has
been a slight upturn in real median household income since June 2011,
but income remains far below the pre-recession level.
The Birth-Death model adds an average of 62,000 jobs to the reported
payroll jobs numbers each month. This arbitrary boost to the payroll
jobs numbers is in addition to the Bureau of Labor Statistics’
underlying assumption that unreported jobs lost to business failures are
matched by unreported new jobs from new business startups, an
assumption that does not well fit an economy that fell into recession
and is unable to recover.
John Williams concludes that in current BLS reporting, “the aggregate
average overstatement of employment change easily exceeds 200,000 jobs
per month.”
In other words, the economy did not gain 288,000 new jobs last month.
But let’s assume the economy did gain 288,000 jobs and exam where the
claimed jobs are reported to be.
Of the alleged 288,000 new jobs, 16,000, or 5.5 percent are in
manufacturing, which is not very promising for engineers and blue collar
workers. Growth in goods producing jobs has almost disappeared from
the US economy. As explained below, to alter this problem the
government is going to change definitions in order to artificially
inflate manufacturing jobs.
In June private services account for 82 percent of the supposed new
jobs. The jobs are found mainly in non-tradable domestic services that
pay little and cannot be exported to help to close the large US trade
deficit.
Wholesale and retail trade account for 55,300 jobs. Do you believe
sales are this strong when retailers are closing stores and when
shopping malls are closing?
Insurance (most likely the paperwork of Obamacare) contributed 8,500 jobs.
As so few can purchase homes, “real estate rental and leasing” contributed 8,500 jobs.
Professional and business services contributed 67,000 jobs, but 57%
of these jobs were in employment services, temporary help services, and
services to buildings and dwellings.
That old standby, education and health services, accounted for 33,700
jobs consisting mainly of ambulatory health care services jobs and
social assistance jobs of which three-quarters are in child day care
services.
The other old standby, waitresses and bartenders, gave us 32,800
jobs, and amusements, gambling, and recreation gave us 3,500 jobs.
Local government, principally education, gave us 22,000 jobs.
So, where are the jobs for university graduates? They are
practically non-existent. Think of all the MBAs, but June had only 2,300
jobs for management of companies and enterprises.
Think of the struggle to get into law and medical schools. There’s
no job payoff. June had jobs for 1,200 in legal services, which includes
receptionists and para-legals. Where are all the law school graduates
finding jobs?
Offices of physicians (mainly people who fill out the mandated
paperwork and comply with all the regulations, which have multiplied
under ObamaCare) hired 4,000 people. Outpatient care centers hired 700
people. Nursing care facilities hired 2,400 people. So where are the
jobs for the medical school graduates?
Aside from all the exaggerations in the jobs numbers of which
ShadowStats.com has informed us, just taking the jobs as reported, what
kind of economy do these jobs indicate: a superpower whose pretensions
are to exercise hegemony over the world or an economy in which
opportunities are disappearing and incomes are falling?
Do you think that this jobs picture would be the same if the government in Washington cared about you instead of the mega-rich?
Some interesting numbers can be calculated from table A.9 in the BLS
press release. John Williams advises that the BLS is inconsistent in
the methods it uses to tabulate the data in table A.9 and that the data
is also afflicted by seasonal adjustment problems. However, as the
unemployment rate and payroll jobs are reported regardless of their
problems, we can also report the BLS finding that in June 523,000 full-time jobs disappeared and 800,000 part time jobs appeared.
Here, perhaps, we have yet another downside of the misnamed Obama
“Affordable Care Act.” Employers are terminating full-time employment
and replacing the jobs with part-time employment in order to come in
under the 50-person full time employment that makes employers
responsible for fringe benefits such as health care.
Americans are already experiencing difficulties making ends meet,
despite the alleged “recovery.” If yet another half million Americans
have been forced onto part-time pay with consequent loss of health care
and other benefits, consumer demand is further compressed, with the
consequence, unless hidden by statistical trickery, of a 2nd quarter
negative GDP and thus officially the reappearance of recession.
What will the government do if a recession cannot be hidden? If
years of unprecedented money printing and Keynesian fiscal deficits have
not brought recovery, what will bring recovery? How far down will US
living standards fall for the 99% in order that the 1% can become ever
more mega-rich while Washington wastes our diminishing substance
exercising hegemony over the world?
Just as Washington lied to you about Saddam Hussein’s weapons of mass
destruction, Assad’s use of chemical weapons, Russian invasion of
Ukraine, Waco, and any number of false flag or nonexistent attacks such
as Tonkin Gulf, Washington lies to you about jobs and economic recovery.
Don’t believe the spin that you are unemployed because you are
shiftless and prefer government handouts to work. The government does
not want you to know that you are unemployed because the corporations
offshored American jobs to foreigners and because economic policy only
serves the oversized banks and the one percent.
Just as the jobs and inflation numbers are rigged and the financial markets are rigged, the
corrupt Obama regime is now planning to rig US manufacturing and trade
statistics in order to bury all evidence of offshoring’s adverse impact
on our economy.
The federal governments Economic Classification Policy Committee has
come up with a proposal to redefine fact as fantasy in order to hide
offshoring’s contribution to the US trade deficit, artificially inflate
the number of US manufacturing jobs, and redefine foreign-made
manufactured products as US manufactured products. For example, Apple
iPhones made in China and sold in Europe would be reported as a US
export of manufactured goods. Read Ben Beachy’s important report on this
blatant statistical fraud in CounterPunch’s July 4th weekend edition: http://www.counterpunch.org/2014/07/04/we-didnt-offshore-manufacturing/
China will not agree that the Apple brand name means that the phones are
not Chinese production. If the Obama regime succeeds with this fraud,
the iPhones would be counted twice, once by China and once by the US,
and the double-counting would exaggerate world GDP.
For years I have exposed the absurd claim that offshoring is merely
the operation of free trade, and I have exposed the incompetent studies
by such as Michael Porter at Harvard and Matthew Slaughter at Dartmouth
that claimed to prove that the US was benefitting from offshoring its
manufacturing. My book published in 2012 in Germany and in 2013 in the
US, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West,
proves that offshoring has dismantled the ladders of upward mobility
that made the US an opportunity society and is responsible for the
decline in US economic growth. The lost jobs and decline in the middle
class has contributed to the rise in income inequality, the destruction
of tax base for cities and states, and loss of population in America’s
once great manufacturing centers.
For the most part economists have turned a blind eye. Economists serve the globalists. It pays them well.
The corruption in present-day America is total. Psychologists and
anthropologists serve war and torture. Economists serve globalism and US
financial hegemony. Physicists and chemists serve the war industries.
Physicists and computer geeks serve NSA. The media serves the government
and the corporations. The political parties serve the six powerful
private interest groups that rule the country.
No one serves truth and liberty.
I predict that within ten years truth and liberty will be forbidden
words uttered only by “domestic extremists” who are a threat that must
be exterminated without due process of law.
America has left us. We now have the tyranny of the Orwellian state
that rules, not by the ballot box and Constitution, but by force and
propaganda.
