Earlier today, Reuters tweeted out a headline on a meaningless change in the weekly jobless claims survey by claiming a drop of 4,000 demonstrated the “strength” of the job market:
— Reuters Top News (@Reuters) June 9, 2016
The drop amounts to a 1.5% change in a notoriously volatile index. It’s statistical noise within a series that has seen its correlation with actual jobs data all but dissipate over the past few years, accelerated by mass exodus of the workforce. A week-on-week change of 4,000 is utterly meaningless in either direction.
After last week’s BLS report on job creation in May, one would think that Reuters would know better than to argue for strength in the jobs market. The economy added only 38,000 jobs last month, and the three-month official average is at 116,000 — not even enough to keep up with population growth. A Johns Hopkins economist estimates that we actually lost 4,000 jobs and that the monthly average for all of 2016 sits at 114,000. That’s only “strength” in Newspeak.
For the jobless, the despair has caused a “frightening” number of them to give up looking for work entirely, according to a new Harris poll reported by NBC:
Nearly half of unemployed Americans have quit looking for work, and the numbers are even worse for the long-term jobless, according to a poll released Wednesday that paints a grim picture of the labor market.
Some 59 percent of those who have been out of work for two years or more say they have stopped looking, the Harris Poll of unemployed Americans showed. Overall, 43 percent of the jobless said they have given up, according to the poll released in conjunction with Express Employment Professionals, a job placement service.
“This is a tale of two economies,” Express CEO Bob Funk said in a statement. “It’s frightening to see this many people who could work say they have given up.”
The results come just a few days after a government report showed that the unemployment rate fell to 4.7 percent in May, but the drop came primarily because of a sharp decline in the labor force participation rate. The number of people of all ages whom the government considers “not in the labor force” swelled by 664,000 to a record 94.7 million Americans, according to Labor Department data.
We have sidelined millions of Americans largely through a focus from the Obama administration on expanding the regulatory state at the expense of small businesses that usually provide the engine of job creation. In my column for The Fiscal Times, I pick up on an analysis from Goldman Sachs about the trend toward part-time work and what drives it as a larger lesson about costs and incentives when it comes to job creation:
One data point in particular might give at least some indication why. The number of part-time workers in jobs for economic reasons shot up by 468,000, apart from the 458,000 that left the workforce altogether. Slack work or business conditions accounted for 181,000 of these jobs, while another 77,000 could only find part-time work.
Analysts at Goldman Sachs have noticed this trend for some time, and put the blame on Obamacare.
“The evidence suggests that the [Affordable Care Act] has at least modestly elevated involuntary part-time employment,” Goldman Sachs economist Alec Philips wrote in a research note published on Wednesday. Obamacare had the greatest impact on industries that traditionally do not offer strong health insurance coverage, such as retail stores and the hospitality industry. Phillips noted that these have the highest levels of involuntary part-time workers, and believes that the ACA has forced “a few hundred thousand” to take cuts in hours or accept part-time work as a result. …
Larger companies can distribute the costs of increased health insurance costs and the employer mandate more broadly. Smaller employers, which have less market clout and smaller room for error, feel the shock of the employer coverage mandate more directly. The ACA directly incentivizes employers to use part-time rather than full-time workers, and smaller businesses have the necessity of grasping at any competitive advantage they can get. Six years after its passage and almost three years after its implementation, Goldman Sachs still sees Obamacare as a prime driver of forced part-time employment.
This isn’t a tale of two economies as much as it is a cautionary tale about the nature of central-command economies. They don’t work, and they create damage and despair. The twentieth century told that story repeatedly, and F.A. Hayek explained why, but every collectivist thinks the problem is that they weren’t in charge of it. At that, we can despair of the world ever learning the correct lessons.