Have you noticed how you hear how many jobs were created each month? Yet we still have unemployment. Tens of thousands of jobs created each and every month, yet the unemployment rate does not go down. How does that work?
When job creation numbers are reported, what is not included is how many jobs have been eliminated.
Think about the announcements you hear. 30,000 jobs were created last month! Okay, that would mean that if that trend continued, we would create 360,000 jobs in one year. In less than 3 years, we would have created over 1 million jobs.
Let’s dive deeper. The population of the US is roughly 330 million. The Labor Participation Rate is 63.2%, meaning 208.6 million people are actively working or seeking employment. If the unemployment rate were true, standing now at 3.7%, that means about 7.7 million people are unemployed.
Here’s the problem with those numbers. They don’t change!!!!
In point of fact, according to the Labor Department, total non-farm employment increased by 130,000 in August alone. In June, they claimed that payrolls increased by 224,000. In July, 164,000. In May, 75,000. In April, 263,000. In March, 196,000.
So, according to the US Labor Dept, in six months time the US economy added over 1 million jobs. Yet the unemployment percentage hasn’t budged downward. If there were any accuracy to these numbers, the US would be in negative unemployment in less than 3 years.
Of course, the Labor Dept was reporting similar numbers last year. In October 2018, they claimed 250,000 had been added. In November, 155,000. In December, another 312,000.
Even if job growth were slower than expected, it would still be job growth. If the economy were truly adding hundreds of thousands of jobs per month, unemployment would not exist.
In addition, consider normal attrition. People retire, get sick or die. In such cases, they leave the job market entirely. Thus, replacing them means people from the applicant pool are hired. So that should be reducing the number of unemployed but it doesn’t. The birth rate has been decreasing over time, so it is well known there are fewer young people entering the job market than the number of Boomers leaving the job market.
Of course, I’ve mentioned before that many jobs are part time or temporary. To be considered “employed” can mean working 1 hour per week or less. If an employer takes a full time job and splits it in half to make two part time jobs, it’s magic! They just created a job!
If this many jobs were genuinely being created, real wages would also be rising. Real wages as defined by wages in relation to living expenses. They’re not, except in very limited areas. Wages would be growing because employers would be competing for workers. They’re not. In the limited geographic areas which have seen wage growth, prices soon increase, eliminating any benefit seen by workers. That’s because employers want to maintain higher than reasonable profit margins. That’s capitalism.
I expect that next month we will see a larger than average number of jobs added, thanks to auto manufacturers listing jobs available as they attempt to hire scabs to cross union picket lines. That’s an example of another falsehood. Just because a company posts jobs does not mean anyone was hired to do the jobs.
We really need to insist on different ways of measuring employment and unemployment. The system we have right now is completely dishonest.