Jack Dunn - Reclaiming Common Sense

The August Monthly Employment Situation Report, or Jobs Report, was released this past Friday. The details of the report were basically forgotten by Saturday. This column has written a number of articles on the subject since the report was released:

  •  "August Jobs Report Better than 2015, 2016" detailed how the Current Employment Statistic (CES) worker growth was better than August 2015 or August 2016. It also detailed how we lost non-seasonally adjusted (NSA) Current Population Survey (CPS) full-time jobs and NSA CPS Part-time Jobs. Unemployment dropped and participation dropped. This is called "the End of Summer."
  • "Five Presidents after Month Seven" detailed how President Trump has added more jobs during his first seven months than Presidents Bush 43 and Obama. While he has not added as many jobs as President Reagan, he has cut the number of unemployed workers more than Reagan. While he did not add as many Jobs as President Clinton, it appears that he has converted more part-time jobs to full-time jobs than President Clinton did.
  • "Multiple Job Workers Near Ten Year High" Details how we set a record for people working two part-time jobs last August, and that the decline in both the Dual PT job worker number and the overall total multiple jobholder number may be due to a conversion from multiple jobs to a single full-time job. It may also be that there was a surge in part-time hiring last Fall in preparation for the November 2016 election.

Another regular feature on this website is the "War on (Wo)Men" series. There was a meme a few years ago that there was a war on women. The real war has been on the male workforce. What has not been reported "elsewhere" is that men took the brunt of the recession. Men lost over 10 million full-time jobs. Men work more full-time jobs, as a generality, than women, and women work more part-time jobs than men. So what Happened this month?

Women are working more full-time jobs than ever recorded. The non-seasonally adjusted data shows that women are working 3.3 million more full-time jobs now than they were during July 2007, the peak of the pre-recession CPS jobs market. Women have been shedding part-time jobs this year. You will also note that women lost 3.6 million full-time jobs at the depth of their recession and started adding full-time jobs to their July 2007 level during February 2015. It is also important to note that fewer than 4 million jobs have been created for women since July 2007. Since July 2007 12 million potential female workers have entered the workforce. This is pulling down the workforce participation rate for women.

More Men are Working Full-time than last August, fewer than July 2017. Men have been struggling to recover lost jobs since July 2007. Men had lost over 10.6 million full-time jobs as of January 2010. They had just begun to add full-time jobs during July and August of last year before they started shedding full-time jobs again. Men appear to be converting part-time jobs to full-time job just as they female counterparts have been doing. Just under 2.5 million total jobs have been added since July 2007 fir 11.1 million male workers. Again, this gap between workers added and total jobs added means that we need more jobs now.

We have fewer Men and Fewer Women Unemployed now than had during August of 2007. Unemployment started to explode for men during 2007. Women saw their unemployment number start to climb during the Summer of 2008.  It is important to note that the number of unemployed male workers does not equal the number of full-time jobs lost for men because they were finding part-time work. Both participation curves appear to be trending higher after bottoming during 2015.

The Unemployment Rate for Men is Lower than it was during August 2007, and higher for women, or are they? The participation rate is determined by the number of participants (FT jobs, PT job, and Unemployed workers) divided by the workforce population. Even though we have more jobs for men and women, the drop in unemployed workers "pulls down the participation rate." add to that the situation that we are not adding jobs as fast as we are adding workers, and the participation rate is going to be lower now than August of 2007. If people are not employed and they are not unemployed then they are missing. If we had the same participation rate during August of 2017 as we did during August of 2007 then we would have over 6 million more men working and almost another 3 million more women working. The "real" unemployment rate for women is closer to 8% and 10% for men.

There is a concept called the Phillips Curve that says that as Unemployment increase inflation decreases and as unemployment decreases inflation heads higher. In theory, as unemployment falls we should see inflation, including wage inflation. We are not seeing wage inflation because we have a "false" read on what the unemployment rate is at this moment.  This column has been promoting the U-7 Effective Unemployment rate for months. We are recording non-seasonally adjusted improvement. The seasonally adjusted data is being reported better, just not as strong as it could be reported. We will see participation improve through December. More participation means more spending of money. Unfortunately Hurricanes Harvey and Irma will also spur more spending. We may see a surge in new construction similar to 2005 and 2006 as we did after the Hurricane Season of 2005 when we saw Katrina, Rita, and Wilma inflict damage in the Gulf of Mexico and in Florida.

It's the economy.