Pethokoukis, Economics, U.S. Economy

June Jobs: An employment report only a central banker could love

Credit: White House

Credit: White House

The June jobs report was strong enough that the Bernanke Fed will likely decide to begin scaling back bond purchases at its September policymaking meeting. At least that seems to be the emerging Wall Street consensus. Example: “After today’s report we are moving to a call for a first reduction in asset purchases at the September FOMC meeting” is how JP Morgan economists put it in a research note titled “Wake up and smell the taper.”  And here is Reuters’ chipper take on the data:

Job growth was stronger than expected in June and the employment count for the prior two months was revised higher, showing the economy on solid ground and likely keeping the Federal Reserve on track to scale back its massive monetary stimulus later this year.

Employers added 195,000 new jobs to their payrolls last month, the Labor Department said on Friday, while the unemployment rate held steady at 7.6 percent as more people entered the workforce. The government revised it count for April and May to show 70,000 more jobs created than previously reported.

But there is plenty more to this story, as folks on Main Street surely know:

1. The economy lost 240,000 full-time workers last month, according to the more volatile household survey, while gaining 360,000 part-time workers. In other words, the entire increase in the household measure of employment was accounted for by persons working part-time for economic reasons. The underemployment rate surged to 14.3% from 13.8%.

2. Does Obamacare explain the poor jobs mix? From the econ team at First Trust:

Given the volatility in these data series, we would not put too much emphasis on one month’s worth of data. However, it’s consistent with the large payroll gains for retail as well as restaurants & bars and probably shows some firms who would be hiring full-timers are hiring part-timers to avoid Obamacare.

3. Part-time America: There are 28 million part-time workers in the US today vs. 25 million before the Great Recession. There are 116 million full-time workers in the US today vs. 122 million before the Great Recession. In other words, 19% of the (smaller) US workforce is part time vs. 17% before the Great Recession

4. Some context: Even at 195,000 jobs a month, the US would not, according to Brookings, return to pre-Great Recession employment levels until 2021. The “jobs gap” remains huge.

5. If the labor force participation rate were back to prerecession levels, the unemployment rate would be 11.1%. And even accounting for America’s aging, the U-3 rate would be roughly 9.1%, according to Goldman Sachs.

Oh, there are some positives. Private-sector jobs were up 202,000. Since the sequester took effect, total nonfarm jobs are up an average of 183,000 per month versus 132,000 for same four months a year ago. (The Fed’s QE has been offsetting the sequester, basically.) The labor force participation rate, while still low, has risen two months in a row. Low inflation means hour earnings are rising.


While the labor market may be improving enough for the Fed, for American workers the Long Recession continues.

UPDATE: A good point from economist Dean Baker:

Job growth was again heavily concentrated, with restaurants (51,700), retail trade (37,100) and employment services (18,600) accounting for more than half of the job growth in June. Total job growth in these sectors has averaged 105,000 over the last three months. These are all low-paying sectors to which workers turn when better-paying jobs are not available.

15 thoughts on “June Jobs: An employment report only a central banker could love

  1. All electronic, real supply chain networks that have ever been developed in the Modern Information Age and by constructing 2-D market processes have acted as “job killers” or as blocks to new business creation.

    Could I suggest you take a look at this article? How a “3-D” supply chain process system could revolutionize business – Strategy – CSCMP’s Supply Chain Quarterly

  2. Points taken. So why in the world do you support a massive expansion of immigration and guest-worker programs? “This labor market is awful – let’s add more labor to it!” Show me an industry in the U.S. with rapidly rising wages, and I’ll agree that sector needs a labor influx. By this standard, we only need a massive influx of foreign bankers, lawyers, lobbyists, and CEOs. Let the rest of the American labor market catch its breath before adding tens of millions to the pool.

  3. I agree with you that we don’t need more on the government dole than we have now. letting more people in the states would only cause havoc! 108,000,000 people are on some sort of assistance. About 10 million new people were added to the welfare rolls in just the two years from 2009 to 2011. AND… the total number of 108,000,000 does NOT include those receiving Social Security or Medicare. You know they lie about how many, if they say 10,000,000 it will be closer to 20. They (politicians)are running this country to the brink of self distruction! Vote them out. End the FED! End the IRS, and all those POS commies!

  4. So, let’s see: Real inflation in food, energy, health care and education are rising; house prices are rising again; mortgage interest rates are rising; and unemployment, while rising, is falling “qualitatively” in terms of hours worked and wage-levels.

    Put this all together and The Bernanke concludes that it is probably a good time to take his foot off the gas?

    What could possibly go wrong?

  5. The Fed has always disconcerted markets by ever quavering about the future of QE. Never does a Fed official, or Bernanke, say something to the effect, “We will taper down, or taper up, depending on future circumstances.”

    With inflation at 0.7 percent PCE y-o-y, and unused capacity up the wazoo, and weak labor markets, why would the Fed taper down?

    In part, because QE is still considered “unconventional.”

    I got news for the Fed: QE may have to become a permanent part of the Fed arsenal for growth.

    If you hit ZLB, then lowering interest rates more is impossible. And when did the BoJ get out of ZLB?

  6. This amnesty bill will add millions more the Obamacare mess in the short term, and as these folks get citizenship, they can then sponsor all their poor (and sick) relatives via family reunification. How long do you think our health care system will last? We’re adding 30 million previously non-covered individuals, this amnesty will add 11.5 or more millions, then based on the 1986 pattern, these 11.5 million will each sponsor (on average) 5 individuals, so the total could easily top 100 million additional individuals in the health care system–how many more health professions, clinics, hospitals, and other health related facilities and supplies will be needed to cover all these additional participants? This amnesty bill is going to be a long-term health care disaster if it passes. Once again, the Democrats, failing to consider the full and long term consequences of the Obamacare bill, are about to repeat their mistakes via the ACA.

  7. sorry I meant to say that the “comprehensive immigration bill” will repeat the mistakes of the ACA.

  8. headwinds to job creation ObamaCare creates for business

    1) new regulatory compliance costs
    2) new taxes
    3) mandates
    4) implicit uncertainty
    5) higher healthcare costs

  9. On the bright side … survival of individuals will depend upon having a spouse and the two of them having 2 part-time jobs and that will give people enough income to have the American Dream but they won’t have any vacation accrual so, here’s the bright side, we won’t need to keep funding any of those National Parks.

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