Settling for Relative Employment Gains

It's all about employment now. More of it would be better, although we may have to settle for losing it at a slower pace for a bit longer.

The U.S. Labor Department will dispatch the official update for September nonfarm payrolls on Friday. Meantime, dismal scientists, pundits and fans of macabre labor stats are making estimates and crunching the numbers on hand.

Wanted Technologies, an employment analytics firm, expects that nonfarm payrolls will fade by 167,000 in September. If so, that would be an improvement over August's loss of 216,000 jobs, albeit a relative improvement.

Absolute improvement, unfortunately, doesn't look imminent. The ADP employment report, released Wednesday morning, advises that the employment rolls shed 254,000 in September. That's better than the 277,000 lost in August, as per ADP, but we're still stuck in the land of relative progress and the odds of returning to Kansas quickly still look slim.

Julia Coronado, senior U.S. economist at BNP Paribas in New York, states the obvious when she tells Bloomberg News that “the state of the labor market is still very weak” and job destruction is “weighing on wages and income,” and remains a "headwind to growth.”

Joel Prakken, chairman of Macroeconomic Advisers, says bluntly that the crowd should be prepared for more losses for the foreseeable future. Although the rate of loss has been diminishing, "employment, which usually trails overall economic activity, is likely to decline for at least several more months, with losses continuing to diminish."

If September's payrolls give ground once more, as seems likely, that'll mark the 21st consecutive month of job destruction for the U.S.—a record string of retreats since the Great Depression. The pain will end soon, but not yet. Then comes cleaning up the mess.

As we've been discussing for some time, the real challenge still awaits. Ending the job loss is critical, of course, but pulling the labor market out of its hole by way of net employment growth on a national basis is a much bigger hurdle. Alas, as Friday's numbers are likely to show, that all-important task is still premature in terms of topical issues du jour.

Comments

[Mark Bern:]

"The pain will end soon, but not yet."

I think the author means "relative" pain. And I also think he should have used the word "may" instead of "will." There just aren't any certainties in today's economy.

IMHO, there are two paths to employment growth. The first, which is most likely but only temporary, is via the stimulus spending. But is government stimulus spending going to be enough to influence employers toward hiring? Stimulus is, after all, temporary in nature, isn't it? Will companies hire full-time permanent employees for a temporary growth prospect? I think not. They will, however, add temporary positions and part-time employees. These should be the first increases we see as growth from stimulus spending creates temporary growth.

The second path would result from increases in consumer spending. I just don't see that happening anytime soon. Unemployment is still rising and those who have jobs still fear the pink slip. Until the tide turns in employment, consumer spending is more likely to stagnate than inflate our economy.

Do you feel rich enough to spend at will on anything your heart desires? If so, you are definitely in the minority now. After all, the US consumer is still dealing with the jolt of having lost $14 Trillion in net worth since 2007. That amounts to about $120,000 per household. That is staggering! I don't expect the consumer to bounce back from that headache for several years. It will happen, but it will happen very slowly.

Sep 30 02:51 PM

[User 353732:]

1. People who are indulgently willing to" settle" for "losing jobs at a slower" pace are typically those with safe jobs, secure incomes and protected retirement funds. This attitude shows a profound disconnect between people on Main St and amongst the privileged and insulated in Big Govt(and its wholly owned subsidiary:Academia), Big Money and Big Media. Easy enough to be clinical and academic when unemployment and underemployment or loss of a small business is a statistical phenomenon and inflicts no tangible pain on the observer.

To ordinary Americans who face anxiety and loss of control about their jobs, savings, retirement, education of their children and care for aging but not prosperous parents and relatives, the net loss of scores of thousands of jobs month after month, with no end clearly visible, is a powerful reminder of the intellectual and moral bankruptcy of the ruling class. It is also an affirmation of the callousness with which Big Media treats the afflicted ordinary American.

2. As the number of jobs is reduced , the remaining employed form a shrinking pool from which further job or wage cuts can be made. For the ratio(the Pain Measure) of jobs shed to people still employed to even remain constant, the number of net jobs lost every month MUST fall,otherwise the Pain Ratio will go up.
It would be more informative to track and comment on the Pain Ratio than the absolute number of net jobs lost, without context.
Only when the Pain Ratio falls dramatically and consistently will real recovery be in sight for Main St.

Oct 01 06:30 AM

[Mad Hedge F...:]

ety With the collapse in employment, it is all about “location, location, location.” No surprise then that Michigan leads the country with a 15.2% jobless rate caused by the implosion of the auto industry. Detroit is suffering a horrific 17.3% rate. Nevada came next at 13.2%, blasted by both barrels of a shotgun by simultaneous layoffs in housing and hotels. Rhode Island at 12.8% took big hits in health care services and tourism. My home state of the “Land of Fruits and Nuts,” California, now has a 12.2% jobless rate, the worst in 70 years. Housing was the grim reaper here, and now 20,000 teachers have started collecting unemployment checks, thanks to our bankrupt state government. Who has the lowest unemployment rate in the nation? Sunny North Dakota at 4.3 %, where healthy agriculture and energy industries kept people in work, and ranking 48th in population, have almost no people to fire anyway. It also helps that the “Roughrider State” was completely bypassed by the subprime boom, and for many years was the cheapest place in the country in which to own a home. To get unemployment back to a normal 5% rate, Obama has to create 20 million jobs by the next election in 1012, one tall order.

Oct 01 06:48 AM

[enigmaman:]

The Admin doesnt give a tinkers damn about the reality facing America, someone tell me what they are doing about fixing our economy, really Im listening. Everything they are doing is to reshape it into what they believe it should look like, IE, forced trillion $ health care, Cap and trade tax, higher tax rates for business and individuals, anti small business, ownership in auto industry, banking, all working for the benefit of the Fed Gov and against taxpayers.

How can anyone believe that our best days are ahead of us with all this as well as an economic environment where higher rates, inflation and or deflation, trillions in deficits are in our future.

Before we can cheer about improving unemployment we have to restore three million full time jobs to those who are now underemployed, we have to restore full time jobs to those that want them but have to settle for part time employment, then we have the 150-175K newbies entering the job market every month

These represent several million jobs that are needed before we can see any real improvement in the unemployment numbers. But maybe because these are not even factored into the Fed unemployment numbers the Fed can report net gains when in fact the truth is the opposite.

Oct 01 09:49 AM

[ETFdesk.com:]

job deficit is actually larger than the recession employment loss since
long-term, demographically driven labor force growth has continued,

over the last decade we have lost 1.7 million jobs (and 7 million since start of this recession)

see article: Wait Until 2017 Before Job Market Recovers, Report Says www.etfdesk.com/headli...

Oct 01 01:14 PM