Each month I am perplexed by silly interpre-tations of the jobs report that pop up around otherwise respectable news outlets around the country. The last one was a perfect example: With the economy creating 204,000 jobs, several reporters claimed U.S. stocks were buoyed by a good jobs report. That is where the silliness begins. Firstly, the jobs report was downright rotten. Secondly, were the jobs numbers actually good, stocks would be likely to decline in anticipation of the Federal Reserve ending its $85 billion-a-month purchase of bonds and mortgages.
At first blush 200,000 new jobs would be welcomed news, as it is almost half the number of monthly jobs we need to be seeing each month to return our labor markets to normalcy by the end of the decade. Alas, the Department of Labor publishes much more detailed data each month, and in that lurks dark shadows of a still stagnant economy. Last month more than 700,000 folks quit looking for work — more than three times the number who found jobs. Of those 200,000 net new job-holders, more than 6 in 10 had to settle for part-time jobs because of a weak economy. In normal times that number is something like 1 in 20.
Overall, part-time employment is dropping, but that is because more people who voluntarily work part time are moving to full-time positions. A healthy economy should have lots of folks who choose to work part time in order to have time to take care of family, to attend school or to pursue other passions. For more than 220,000 workers to shift to full time in one month is likely evidence of heightened financial distress in many families.
Overall, part-time employment is holding steady, allowing Secretary of Health and Human Services Kathleen Sebelius to dismiss reporters who question whether the Affordable Care Act is weakening labor markets. Her economic analysis isn’t any better than her management of website development. So far this year, the majority of new jobs have been part-time positions to workers who want to work full time, while just last month more than 200,000 voluntary part-time workers shifted to full-time work. This is a sign labor markets are weak and weakening.
There is scant evidence things are getting better. Perhaps the only sign is that manufacturing jobs accounted for the second highest number of new jobs. Still, retail was No. 1 and motels, No. 3. The plain fact is American labor markets are astonishingly weak, and the stock markets know this lessens pressure on the Federal Reserve to end its quantitative easing program, hence the stock market jump following last week’s dismal jobs report.
The major news reports got it exactly wrong. Sadly, we are going to get a good confirmation of that when the Fed ends its quantitative easing.
Michael J. Hicks, Ph.D., is director of the Center for Business and Economic Research and a professor of economics at Ball State University. Contact him at firstname.lastname@example.org.