Jack Dunn - Reclaiming Common Sense

More Jobs than workers, again. Participation is improving.


The March Employment Situation Report, or jobs report, was released the first Friday of March. This Jobs Report was a disappointment because fewer jobs were added than were anticipated. The article "March Jobs Report better than March 2017" detailed the changes in full-time jobs, part-time jobs and unemployed workers, as well as the total number of workers added to the economy, the change in population, and the change in the participation rate and the unemployment rate. That is where most people left the report. This column digs into the data. There are a number of follow-up articles that have been created, for better or for worse, as a result of Internet memes. There was a meme that proposed that President Obama had created more jobs, after 81 months in office, than President George HW Bush and George W Bush and was only second to President Clinton. The problem is that the person who created the meme was comparing one President who was only in office one term, George HW Bush,  to a Presidents who had served two full-terms (Clinton and George W Bush) to a President with over a year remaining in his second term. There are many things that can happen during the final month in office, as George W Bush experienced. Four Presidents at 81 months was a three-part analysis. At the time George Bush had created more jobs than President Obama. How is President Trump doing compared to President Reagan, George W Bush, Clinton and Obama after 14 months?


President Trump has created more jobs than any of his predecessors. Part of the reason President Trump has added more jobs than his predecessors is that the economy is larger now than during 1982, 1994, 2002, or 2010. Part of it is that Trump has seen 4.4 million more jobs created while President Obama saw the net loss of 2.453 million jobs. President Bush saw a net loss of 623,000 combined jobs. Presidents Reagan and Clinton were the only one to add jobs. President Reagan added 621,000 jobs and President Clinton added 3.816 million jobs. The thing to remember is that President Clinton added 3.292 million part-time jobs and 524,000 part-time jobs. President Trump did the opposite in adding 3.4 million full-time jobs and over 900,000 part-time jobs.


President Trump and President Clinton were the only Presidents to cut unemployment during their first 14 months in office.  President Obama saw unemployment increase by 2.7 Million during his first 14 months in office, followed by President Bush at 2.1 Million. President Reagan saw unemployment fall by 1.5 million. President Clinton saw unemployment fall by 1.3 million. President Trump saw unemployment fall by 1.5 million. So most jobs created and most unemployed workers "trimmed."


President Trump, Clinton, and Reagan were the only Presidents to see their participation rates improve during their first fourteen months. People who have full-time jobs, part-time job, or who are officially unemployed are considered participants. We could have 158 million full-time workers, 158 million part-time workers, or 158 million unemployed workers and we would still have 158 million participants. A drop in unemployed workers is a negative participant unless that worker finds a full-time or part-time job. If they are neither employed (FT or PT) or unemployed, they are missing. It is also important to note that President Trump inherited a lower participation rate than ANY of his predecessors.


This Jobs report received very little love from the prognosticators this past Friday. Unemployment fell to levels not seen since President Bush. Jobs were created at a better rate than March of 2017. The participation rate is improving. It is difficult to have participation improve as unemployment falls because unemployed workers are participants.  A drop in unemployment without an increase in employment equal or greater to the drop in unemployment lowers the participation level and the participation rate.  There are those who say that President Trump inherited a growing economy.  Remember that the Dow Jones futures were down over 700 points on election night. Remember that the GDP was dropping on an annualized basis. While it is true that President Trump has inherited a larger economy that his predecessors, more jobs and a larger workforce population, it is also important to understand that the data has been manipulated to make the reports look worse than they have been. The population for President Obama was reduced during his final month to boost his participation rate. The workforce population during January 2018 was boosted by an equal percentage, thereby reducing President Trump's participation rate. The CES data for 2015 was reduced while the CES data for 2016 and 2017 were boosted, effectively trimming the January 2018 "jobs" number by more than half.


We are not at full employment. The participation rate for President Trump started lower than it did for President Reagan. It has been argued by the prior administration that participation has been falling because Baby Boomers have been retiring. The data does not reveal that. We still have at least 1 million missing participants. It may be as high as 9.5 million missing participants. We will see over the next few years if it was structural problems or fiscal policies.


There was considerable concern regarding wages with the release of the January Jobs Report. This column has not addressed this topic until this month. This will be the next article. The research was interesting.  The data will receive other treatments that readers of this column have come to expect. There will be the "War on Men" article, the multiple job holder article, the sector data article, and the Aging Workforce, or "Red, Gray, and Blue" article. It all matters. A growing full-time workforce means higher wages, hopefully. If people are receiving higher wages and more people are working the net income of the workforce is being reinforced and expanded. More money in wages me more money to spend on housing and on retail purchase, A virtuous cycle is, quite literally, a good thing. More sales means a better stock market and the ability for people to "finally" retire. If older workers are able to retire then younger workers will find new job opportunities.


It's the economy.