Labor Market Continues to Underperform

Its been a while since we’ve highlighted the musings of Barron’s Alan Abelson:

"AS INTIMATED, the employment report for December released Friday morning by the Bureau of Labor Statistics was something less than a barn-burner. Instead of the 200,000 additions to payrolls the seers on the Street had anticipated, there were 108,000. That’s rather a bad miss, in our bloodshot view, but it was pretty much shrugged off as a peccadillo by various and sundry commentators (most of whom happened to be among those forecasting 200,000). We’re glad they’re not doing something important like working the registers at a supermarket checkout counter.

Some of the wrong guessers noted that November’s gain had been revised upward to 305,000, from the originally reported 215,000, as if that somehow off- set their woeful December miscalculation. No mention that perhaps November was artificially inflated by a post-Katrina lift. In any case, last month’s job total was, in a word, punk.

Or, as Philippa Dunne and Doug Henwood, the dynamic duo who run the Liscio Report and whose deft dissections of the employment figures we’ve had the pleasure of featuring in this sacred space more than once, put it: The gain of 108,000 jobs "was a disappointment by any standard (and not much larger than the survey’s margin of error)." While, as they point out, private services added 82,000 jobs, "few sectors really stood out as leaders" except for bars and restaurants, "which have been the source of 11% of all the job gains over the last year." That begs for comment, but all that occurs to us is the lugubrious thought that more and more people must feel the need to drown their sorrows, occasioned –who knows? — by an inability to find a better job or the worry of losing the one they have.

Health care once again was a job-generator, accounting for 21,000 payroll additions. Our suspicion is that these mostly are not very high-paying slots, but, in any case, as Philippa and Doug wryly observe, "this sector’s gains are not necessarily good news for the rest of the economy."

Average weekly hours worked slipped 0.1%, and average hourly earnings were up a modest 0.1%. As our perceptive pair observes, "on a yearly basis, earnings gains are still lagging inflation. If the labor market were really as tight as some claim, wouldn’t we be seeing stronger wage gains?"

Unemployment was off a tick, to 4.9%, but that largely reflected a shrinkage of the labor force. Had those labor-force dropouts been added to the unemployed, reckon Philippa and Doug, the unemployment rate would have risen to 5.1%.

All in all, they sum up, "the labor market continues to underperform." Pure and simple.

Well said . . .


The Vulture’s Song
Barron’s, MONDAY, JANUARY 9, 2006

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  1. Emmanuel commented on Jan 7

    McJobs make up most of the new hires–same old, I’m afraid. If these are the sorts of jobs being created, is there any surprise that wages aren’t rising? Flip them burgers good, guys and gals. America is frying and crying all the way to the bank. (Oops, there’s no point going to the bank. No savings, you see.)

  2. muckdog commented on Jan 7

    Maybe those who “dropped out” of the workforce decided to stay at home in December and play their new XBOX 360. Who knows from month to month?

    We could be near full employment. Seems like we’re on a pretty steady tack right now. When you smooth out the numbers from month to month, you can see that the economy is hiring new workers to the workforce. All this is happening without the late 90’s wage wars trying to convince workers to switch jobs every few weeks for higher and higher salaries, while hiring unqualified workers to fill in the gaps.

  3. B commented on Jan 7

    On that note, I’ll bet the new Kong-Sized Whopper at Burger King, with 1230 calories and 82 grams of heart attack inducing saturated fat will surely help next month’s health care employment figures. I’m beginning to think the introduction of the King Kong flick was timed with this jobs report so BK’s new sandwich would coincide with next month’s jobs report.

  4. Jeremy commented on Jan 8

    Presumably the Kong-sized whopper will also help boost healthcare employment going forward

  5. Mike commented on Jan 8

    If you go to my 1/7/06 blog from I cover the jobs report. Once again, whether it is Barron’s or some other media
    outlet, they are missing a significant point. The overall workweek declined to 33.7 hours from Nov’s 33.8 hours, and the factory workweek declined by 0.1 hours too. Multiply that 0.1 hourly loss by the number of workers in the workplace and you discover almost 140,000 lost jobs. This is a continuation of a trend. I have mentioned this in prior blogs on the jobs report.

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