Mike Shedlock puts a huge pin in the MSM/Government Jobs Recovery storyline bubble. The economy lost 276,000 full-time jobs and gained 446,000 part-time jobs in February. Does that sound like a recovery? It sounds like deperation to me. It sounds like Obamacare to me. I work for the largest employer in Philadelphia and I’ve seen first hand that they are panicked by Obamacare. It is so complicated they are paralyzed with fear of doing something wrong and incurring huge penalties. Obamacare is stopping companies from hiring employees and it is making others convert fulltime workers into part-time workers. But pay no attention to the facts. Buys stocks and “invest” in a few houses.
Spoiling the “Great Employment News”
This article originally appeared on MarketWatch under the title Jobs numbers are far worse than they look.
I selected my title from a humorous comment on MarketWatch by reader “Homer Price” who writes “Mike, What are you doing ? Trying to spoil the GREAT EMPLOYMENT news. Just wait until next year when the Unaffordable Care Act kicks in. THE BEST IS YET TO COME ……………………….. ”
There are other interesting comments as well. Inquiring minds may wish to take a look. Now for my article …
Economists were surprised by the massive “beat” in today’s reported job numbers. The unemployment rate dropped .2 to 7.7% and the economy allegedly added 236,000 jobs.
Is that what really happened? No not really.
According to the household survey (on which the unemployment rate is based) the economy added a healthy 170,000 jobs. However, a whopping 446,000 of those jobs were part-time jobs. Simply put, the economy shed 276,000 full-time jobs.
The BLS labeled those 446,000 part-time jobs as “voluntary”. I am not so sure.
A Gallup Survey yesterday on Jobs show the percentage of workers working part time but wanting full-time work was 10.1% in February, an increase from 9.6% in January, and the highest rate measured since January 2012.
Gallup notes “Although fewer people are unemployed now than a year ago, they are not migrating to full-time jobs for an employer. In fact, fewer Americans are working full-time for an employer than were doing so a year ago, and more Americans are working part time. Although part-time work is clearly better than no work at all, these are not the types of good jobs that millions of Americans are still searching for.”
Obamacare Effect
Obamacare is in play. Recall that under Obamacare, the definition of full-time employment is 30 hours. The BLS cutoff is 34 hours. At 30 hours, companies have to pay medical benefits so they have been slashing the number of hours people work. This reduced the number of hours people worked and provided an incentive for many to take on an extra job.
We can see the effect in actual BLS data.
Multiple Jobholders as a Percent of Employed
After declining for years, the percent of those working two or more jobs is again on the rise.
Multiple Jobholders
In the past month there was a surge of 679,000 in the number of people working multiple jobs. The seasonally-adjusted increase, as shown above, was 340,000.
One can look at the data two ways.
- The economy is getting better and more jobs are available
- People are working more jobs because their hours were cut and they need a second job
Evidence suggests more of the latter than the former.
Expect Downward Revision in Establishment Survey
The reported 236,000 surge in the establishment survey is not real. It will be revised away.
This is why: In the household survey one is either working or not, thus multiple jobs do not distort the reported unemployment rate (although there are many other distortions such as the participation rate and declining labor force).
The establishment survey, however, is distorted by people working multiple jobs. A surge in multiple-job workers would artificially hike the baseline number. I expect revisions later, probably huge downward revisions.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/2013/03/spoiling-great-employment-news.html#frwKOgZDyg8gsAZc.99
razzle says:
I am a small business owner, very small, 3 employees. Ovomit care will likely not effect me directly. However, it will likely affect my customers. I am not sure what is in the bill, excatly, apparantly you have to pass it to see what it is in it. I have a customer who is a brain surgeon. I shit you not. His wife brings the car in, I have only met him once. She is talking about some type of outline group insurance that you pay outside of the regular stream.
Many of my friends are working multiple part time jobs, full time is verboten.
Until I get some sort of semblance of reality, I will not expand, I will contract. Washington cannot expect me to risk when risk isn’t defined.
Sorry for the rant.
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9th March 2013 at 7:40 pm
KaD says:
Rant appreciated. What type of business is it, if you don’t mind. If you do that’s okay too.
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9th March 2013 at 8:50 pm
razzle says:
I own and operate an automotive repair shop. My forte is Volvo cars, although we service and repair MOST all makes and models.
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9th March 2013 at 9:02 pm
wip says:
Admin, why not offer/start an HSA for your employees? Would that do the trick?
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9th March 2013 at 10:19 pm
marissa says:
@razzle
For over a decade I was the proud owner of a 1967 Volvo 122S. I loved that puppy, it was family to me. Behemoth of a machine. I gave it to a friend of mine in 1986 who drove it 2,000 miles back home. I believe it is there still.
Best car I’ve ever owned. If I could have gotten parts and leaded gas for for it, I’d be driving it still. I loved my Volvo. The only automobile I’ve ever adored.
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9th March 2013 at 11:01 pm
Administrator says:
wip
Non-profits have to draw employees with a good benefits plan since they don’t pay anywhere near the level of corporations. Big institutions don’t make dramatic changes.
They will use temp agencies on a much greater scale to avoid the possible Obamacare impacts.
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9th March 2013 at 9:00 am
Administrator says:
Posted 2013-03-11 08:01
by Karl Denninger
Complacency At An All-Time High
The DOW hit “all-time new highs” all last week.
Isn’t it redundant — and stupid — to use “all time” and “new” in the same phrase?
Yes, it is — and about as stupid as believing in this “rally”.
The facts are that last night Japanese machinery orders fell 13% in January, despite the Japanese government pledging to “beat deflation” with new monetary operations (read: printing money) that has driven the Yen weaker by some 20% in the last couple of months. That move started in December and as such should have been reflected in January’s order figures — if anyone believed it in Japanese business.
They clearly don’t.
Then there’s China. They have a major property bubble problem, which is what always comes when you start printing cheap “money” (really credit) and allowing it to go into the real estate market. In China’s case it’s built to the point of literal cities with nobody living in them. That will eventually burst, and when it does you’ve got trouble. China has the “luxury” of having an effective command economy since they’re a communist nation, but even that won’t change the laws of mathematics.
Finally we have Europe. It’s a basket case. Europe has failed to deal with its banks, it has failed to deal with its budget deficits and it is still trying to find a way to “pull forward demand” to fill fiscal holes. It’s not working because it can’t — the leverage was never taken out. Not there and not here.
We’re “printing” $85 billion a month and yet can only muster a 0.1% GDP print? Let’s assume we manage to “rebound” and get a 2% GDP number. We’re diluting purchasing power by ~8% annually! Where is that going? Right into the middle class and below’s pocketbook; like a thief in the night it comes and steals their buying power and that ultimately has to reflect in what they purchase — and thus what people sell.
There are those who argue that the housing market has “turned.” Really? Look at Las Vegas, where there are tens of thousands of homes sitting with people in them who haven’t made a mortgage payment in three years! The banks can’t foreclose as they can’t produce the paperwork and state law was passed forcing them to do so. The hedgies have come in and bought up what little inventory there was, squeezing rents. How’s that going to end when the consumer has a rapidly-deteriorating purchasing power with which to pay rent? Meanwhile consumer sales look ok for now, because all those non-paid mortgages lead to $100 million or more in retail sales that otherwise would not be made — if I’m not paying a $1,500 a month mortgage and living “free” I sure as hell can afford a new car or a few pairs of new shooz. The key question: Is this a stable environment or is it another bubble that will bust when cap rates fall? And if the latter, and you erroneously bet on a “housing recovery”, are you going to get reamed twice in a decade?
As for equities it all comes down to profits. They’ve been climbing in the last couple of years. But much of this is pulled forward purchasing power from non-made mortgage payments along with an unprecedented bout of whip-cracking on the backs of workers scared to death to lose their jobs into a crap labor market. Productivity gains either show up in better prices or better profits — this time it’s been better profits.
But now that trend has reversed and productivity and labor costs are going the wrong way. This is going to accelerate in a massive way, as Obamacare is hitting this year and next and for many firms, especially those with young and healthy workforces, it will double their health expenses. This is in exactly the worst place for it as youth already have a terrible employment situation — this is likely to drive that segment’s unemployment north of 25%!
The regional Fed surveys all showed an incoming recession starting last August. These indicators are usually 6 months early. What time is it?
Could they be wrong? Sure. Show me the data. Not the stock market, the economic data. There has been no change in employment statistics that have been positive. Let’s look simply at the non-adjusted “employed” figures for the last four months and compare against last year.
In November 2012 we lost 490,000 jobs. In December, 489,000. In January, 1.446 million. And last month we gained 614,000.
In November 2011 we gained 83,000. In December, we lost 389,000. In January, 737,000. And in February 2012 we gained 740,000.
Which is the better set of four-month statistics?
What’s the trend?
The shift, incidentally, happened in November. Up until that point employment had been mixed, but there were two months in 2012 — September and October — which had been markedly better than 2011. I noted it at the time and that it might be a trend change.
It wasn’t.
This is exactly what you’d expect given the Fed surveys, as they began softening in August. It takes a couple of months for people to recognize the trend change and react with their hiring — or lack thereof.
In the end folks stocks are all about discounted cash flow from dividends. That’s it. The buyback craze is amusing to watch; it builds short-term price changes on the back of leverage and people forget that they amplify losses as well as gains. They are also a declaration that management has no good place to invest operating profits, which is the worst thing that can happen to a business in terms of long-term prosperity.
In short what we have here is a market that is levitating upward not due to an improving macro environment but rather due to Fed monetary games. This can and has worked for a while, but like all sleight-of-hand games it cannot continue forever, and won’t. The structural imbalances that have been built over the last four years set the table for a snapback move worse than 2008.
This morning CNBS is playing a card that we “should” put forward fiscal policy mirroring The Fed’s views. These clowns actually believe that the laws of mathematics have been repealed?
Give me a break. The guy who decides he doesn’t need more than 2 hours of sleep a night and starts shoving coke up his nose to achieve that outcome may indeed produce more work with less sleep and appear to be more productive.
For a while.
But eventually he has a heart attack, and the question becomes this: What are you going to do when you collapse due to the abuse you have heaped on your body and now are able to produce nothing?
Our economy is experiencing chest pains and rapidly-escalating amounts of coke are going up the nose on a daily basis.
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9th March 2013 at 10:17 am
TeresaE says:
The gains in jobs were in professional services.
It was for FEBRUARY.
Taxes are due on 3-15 (corp/partnerships) and 4-15 (sole proprietors, individuals).
Wow! Great news that we added the jobs that are 100% necessary thanks to the complexity of our freaking tax system. Wonder why these jobs are NEVER shown as going away (which they absolutely, positively do) in April?
And, in retail/minimum wage jobs.
Ok, so here is the recovery.
Or, is it just the reality of Obamacare’s one year lookback period being realized by everyone from JCP to the temp service that staffs the parking lots?
Cut hours below 30 or pay for insurance.
Of course jobs were “added.”
In actuality this “great” number reflects further deterioration covered up by inaccurate and misleading – both intentional and not – “analysis” of the reporting.
At one point in my life I had trust in the government to not lie to us, at least not fully creating realities that don’t exist.
Now I know I was naive, brainwashed, distracted.
One great thing, if I read, or hear, anyone touting gov stats as “proof” of ANYTHING, from flu shots to Federal Reserve gold, I know that they are still living in the matrix – either partially or full on – and to take their opinions with a lot of skepticism.
I don’t know if it is brave, or stupid, to leave the land of comforting lies and move over to the fear and constant stress of seeing the shit bearing down on us, all I know is that once your eyes are opened, it is nearly impossible to get them to close again.
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9th March 2013 at 11:33 am
i dun unerstan u lah!: An exposé of Singapore and Singporean retardation « The Single Dude's Guide to Life & Travel™ says:
[...] setup a shared service center in another country. Problem solved. It’s the same position Obama has put American businessmen with his retarded healthcare law, and that Hollande has put business owners in in France. “Oh you want further raise my costs [...]
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9th March 2013 at 9:34 am