- On May 6, headlines cheered the new jobs report, New
York Times writer Motoko Rich headlining, "Payrolls Show Strong Growth
but Jobless Rate Rises," saying:
- "For three straight months, the nation's employers
have delivered solid job growth, easing some concerns that the economy
could be slowing."
- Bloomberg.com's Timothy Homan said:
- At 244,000, "American employers in April added more
jobs than forecast....indicating the world's largest economy is weathering
the impact of higher fuel prices."
- Wall Street Journal writer Sara Murray wrote:
- "Job engine shifts to higher gear (as) companies
cranked up hiring in April to the fastest pace in five years...."
- In fact, labor force participation held steady at 64.2%
for the fourth consecutive month, down from 66% in 2006. Moreover, economist
Jack Rasmus estimates 25 million unemployed, a number showing downturn,
not growth. He also explained that considerably more workers left the labor
force than entered it, saying:
- A recovering jobs market "does not experience that
kind of massive number of discouraged workers leaving the labor force.
Quite the opposite. A truly recovering labor market is characterized by
large numbers of discouraged workers re-entering the labor force. Something
else is going on here."
- In addition, about one-third of new hires are temporary
or part-time, jobs paying two-thirds or less than normal pay with few or
no benefits. Moreover, another one-fourth are temp agency hires, meaning
around one-half of all jobs created are "low pay, no benefit"
ones, showing a sick, not healthy economy.
- At the same time, initial jobless claims hit an eight-month
high, rising to 474,000 for the week ending April 30, the third increase
in the last four weeks and a clear sign of job losses, not gains, so what
to make of the Labor Department's report. More on phantom jobs creation
- Other reports also look dire. New Department of Agriculture
data show 14.3% of Americans receiving food stamps, a record 44.2 million
and rising. Moreover, US Census figures show over 47 million Americans
in poverty, more than one in seven but way underestimated.
- Even the Census Bureau admits that official thresholds
were developed over 40 years ago. As a result, they omit:
- -- true rising inflation levels, notably food and energy
- -- other expenses like child care, transportation, high
tuition and medical expenses; and
- -- stagnant or falling incomes in recent years, as well
as eroding benefits.
- In addition, cost of living levels vary greatly around
the country - among regions, between large and small cities, and between
urban and rural areas.
- For a family of four, the official poverty threshold
is an annual $22,350 income, a figure far below reality. For example, a
family of four in Peoria, IL needs $42,900 to be above poverty. In Chicago,
it's $49,000 and in New York $72,000.
- The Bureau also excludes 2.4 million prisoners, elderly
residents in nursing homes and other long-term care facilities, as well
as students living at school, undocumented immigrants, itinerants, and
families or individuals forced to double up for economic reasons. They're,
in fact, counted as a single higher-income household.
- Last fall, according to David Johnson, the Bureau's Housing
and Household Economic Statistics Division head:
- "If the poverty status of related subfamilies were
determined by only their own income, their poverty would be 44.2%. When
their poverty is determined based on the resources of all related household
members, it is about 17%."
- Income and poverty estimates are also pre-tax, excluding
non-cash benefits, partly employer-provided, but diminishing as they shift
the cost burden to employees. However, disposable personal income, after
income, payroll, sales, property, and other taxes reveals a far higher
poverty level than Bureau figures, and a much graver crisis for growing
millions sinking below the real poverty threshold.
- Moreover, Blacks and Latinos fare nearly three times
worse than whites, a shocking underreported reality as well as America's
eroding middle class. At the same time, a Deloitte Center for Financial
Services report estimates the proportion of US millionaire households will
reach 9% in 2011, a scandalous indictment of decades of wealth transfers
to America's super-rich already with too much.
- Other disturbing data show record homelessness numbers,
estimates ranging from 2.3 - 3.5 million Americans on any given night,
needing refuge wherever they can find it or face life on city streets.
- In addition, experts predict record numbers of home foreclosures
in 2011 with about five million owners two or more months behind on mortgage
payments. According to RealtyTrac's Rick Sharga, one in every 45 households
got foreclosure notices in 2010 when a record one million homes were lost.
He estimates 1.2 million repossessed this year, another important sign
of economic weakness.
- Labor Department (BLS) Phantom Job Creation
- Monthly BLS reports mask the weak job picture, including
- "The confidence level for the monthly change in
total employment is on the order of plus or minus 430,000 jobs."
- In other words, in good times, data may accurately or
understate employment growth, but during today's hard times (a Main Street
depression), it's mirror opposite.
- Moreover, manipulation characterizes BLS calculations,
including the so-called "birth-death model" estimate of net non-reported
jobs from new businesses minus losses from others no longer operating.
During expansions, the model works because start-ups exceed shut-downs.
It doesn't in recessions. Yet the BLS assumes employees from non-operating
companies are still there. In addition, BLS adds 30,000 jobs monthly whether
or not new companies exist.
- Economist John Williams reverse engineers monthly employment
numbers based on how calculated in 1980. He estimates the "death"
side at about 200,000 per month and calls the "birth side" stillborn.
As a result, BLS overstates monthly employment figures by 230,000, what
later benchmark revisions show, a recent one erasing two million phantom
- Moreover, as calculated, the U-3 headline number omits
many people without jobs wanting work, including many long-term unemployed
ones who stopped looking after fruitless months of trying. In addition,
part-time workers wanting full-time jobs aren't included. As a result,
BLS produces meaningless headline numbers, concealing the true employment
picture deliberately, especially in hard times to hide reality.
- The more accurate U-6 figure is broader, including:
- (1) "Marginally attached workers: people wanting
jobs but not actively looking in the past 30 days, but have looked unsuccessfully
in the last year." This category also includes "discouraged workers"
who completely gave up in frustration within, but not exceeding, the past
- (2) People looking for full-time work but forced to take
part-time or temporary jobs to be employed.
- John Williams provides the most reliable monthly data
on his Shadowstats.com web site. He reports current U-3 unemployment at
9.0% and U-6 15.9%. He calculates the true figure at 22.3%, what he calls
his "Official SGS Alternative Unemployment Rate" by adding uncounted
long-term (one year or more) discouraged workers to BLS U-6 figures.
- Like Williams, economist Jim Fitzgibbon calls the U-3
calculation "worthless," adding, "the entire (BLS) report
is seasonally adjusted to be positive, while the non-adjusted data is just
awful." That's why BLS conceals it.
- In fact, the latest jobs report showed virtually no gain
and earlier in the year positive numbers concealed losses. At best, job
creation is stillborn, not positive but don't expect official Washington
or media pundits to explain.
- Stephen Lendman lives in Chicago and can be reached at
email@example.com. Also visit his blog site at sjlendman.blogspot.com
and listen to cutting-edge discussions with distinguished guests on the
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