The Bureau of Labor Statistics reports that the economy added 200,000 jobs in December, enough to tick the topline unemployment rate down another notch to 8.5%. This was above expectations, but given the decent economic news over the last month, I expected a good report.
October’s numbers revised up to +112,000, and November’s to +100,000. So December jobs grew at almost twice the rate.
The reason that the unemployment rate was able to tick down, however, is that the labor force participation rate remained unchanged at 64.0%. This low participation rate means that, even with the economy growing and the job market improving, a fair number of able-bodied workers have not rejoined the labor force. When they do, and when the labor force participation rate increases, that will put upward pressure on that topline unemployment rate. And unless everyone came into found money, that’s fated to happen. The employment-population ratio also remained unchanged in December (58.5%), despite the job additions. The average workweek and average pay went up very slightly over the month.
We still have a major problem with long-term unemployed, those out of work 27 weeks or more. They account for 42.5% of the total unemployed, a record 5.6 million workers. They need more than just decent reports; a surge in hiring would be required to get them back to work. Involuntary part-time workers fell in December, so really the long-term jobless stick out even more.
Once again, the private sector led the way with 212,000 jobs gained. Government jobs fell by 12,000, and by 280,000 over the course of the year. For 2011, total payroll increased by 1.6 million, with the private sector up 1.9 million. Obviously this is a vast improvement on where we were in the Great Recession, when jobs were evaporating by hundreds of thousands a month. But it’s not nearly robust enough to get back to an equilibrium.
Transportation employment, particularly couriers and messengers, went up sharply in December, along with the expected gains in retail, given the holiday shopping season. A boost to couriers makes complete sense around the holiday season as well. Manufacturing jumped by 23,000 after four months of stagnating. Health care and restaurant services added jobs. Professional business services stalled out.
If you strung together a bunch of months like this, the economy would still not be where it was in the Clinton years, when 300,000 jobs a month were created on average. This is a decent growth report that, even if replicated, would still take years to get back to a normal rate of employment.
UPDATE: For context, the jobs numbers for 2011 are the best since the 2005-2006 period, in terms of total employment and private-sector employment. But coming out of the deep hole of the recession, these are not sizzling numbers. A year which averaged 300,000-400,000 jobs a month would be a hot economy.
UPDATE II: Dean Baker has more on the courier hiring.
The survey reported 200,000 jobs in December; however this figure is skewed by the 42,200 job gain reported for couriers. There was a similar gain in this category reported for last December, which was completely reversed the next month. Clearly this is a problem of seasonal adjustment, not an issue of real job growth. Pulling out these jobs, the economy created 158,000 jobs in December, in line with expectations.
With the expected reversal, the jobs report for January starts already in a 42,000-job hole.




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It would be nice to supplement this information with data on the average wage in the private sector, which from anecdotal counts in the papers is falling sharply in manufacturing. Anyone who thinks that lower unemployment under these conditions (setting aside the stagnant participation rate) will cause consumption spending significantly to increase is dreaming in technicolor. We are in a Depression for the long haul, unless the rest of the world (or mars) decides to buy a lot more American goods. It is significant that the one sector doing really well is agriculture, where we have an unbeatable comparative advantage that cannot be competed away by low wages in the rest of the world.
x2
How many of these jobs were seasonal retail positions paying $7-9 an hour?
My sense that the latest jobs reports record a bear market rally in a secular downward jobs market. Bernanke believed that the application of Milton Friedman’s prescription for averting a depression–increasing the money supply–would do the trick. Experience over the past 4 or 5 years has shown that the Friedman remedy can delay the worst effects of the downturn (creating, in Krugman’s phrase, a Lesser Depression rather than a Great Depression, for the time being) but it cannot reverse the process. Ultimately, Friedman’s thought is shallow.
The Bureau of Labor Statistics? Why would anybody believe their numbers?
There’s more bang for the buck creating jobs in the non-defense (education, health care, green) sectors of the economy.
ghostof911,
The numbers are interesting, but they most likely also reflect the difference in the pay rate. My guess is that the military jobs are at a much higher pay scale than teachers.
Now, even as a 21-year USAF veteran, I would prefer we spend our money on something that improves our situation at home like the green jobs and teachers. And, if you have a top-notch military, we have folks that view it as a toy they must use, which ends up putting us in a big hole.
I noticed that my local paper the Spokane Spokesman-Review had a nice article about how Romney’s tax proposal would cut taxes on the wealthy and increase them on the poor. The fact this information is out there so quickly is something I attribute to the OWS movement. It is much harder to sweep this data under the rug now.
Precisely. The dollars going to one bomb-maker’s salary would pay the salaries of several teachers, and that’s not taking into account the non-economic benefits of funding the latter over the former.
Spot on about OWS. It is changeing both the tone and the content of the conversation.
Just received email from Gary Johnson campaign.
Nebraska Libertarian Party Central Committee Endorses Gary Johnson
January 1, 2012 OMAHA, NE – Party Chairman Gene Siadek issued the following statement:
“After Governor Johnson’s December 28th announcement that he was going to seek the Libertarian Party’s nomination for President of the United States, I called a meeting of the State Central Committee in accordance with our Party bylaws to discuss and vote on endorsing his candidacy.
“I am happy to announce today, the Libertarian Party of Nebraska’s Central Committee has voted to endorse Governor Johnson as the Libertarian candidate for President of the United States. I believe we are the first state committee to do so and we are happy to announce our endorsement on Governor Johnson’s birthday.
“Governor Johnson brings to the table two-terms of executive-level experience in New Mexico and a proven record of fiscal responsibility and social tolerance. In 2002, Governor Johnson left his term-limited post with New Mexico being one of only four states in the country with a balanced budget. He vetoed 750 bills during his time in office; more than the other 49 Governors combined. He also cut over 1,200 government jobs without firing anyone and cut taxes 14 times while never raising them.
“While America suffers under a “government knows best” administration that has utterly failed on its promises of both hope and change, and while our neighbors in Iowa prepare to caucus on big-government Republicans, (minus one non-GOP-supported candidate), we are encouraged to have a strong Libertarian running under the Libertarian banner.
“We feel that the red-Republicans and blue-Democrats have essentially become one Purple Party that no longer represents the vast majority of Americans. Further, we agree with Governor Johnson’s statement, “Sadly, neither the Republicans nor Democrats will offer this agenda [of fiscal conservatism and social tolerance] to the American people. The Republicans talk about cutting spending and taxes but insist on government regulating our personal lives. The Democrats support more liberal social policies but they will tax and spend and borrow us into bankruptcy. America needs a third way.”
“We are hopeful that Nebraska Libertarian Party membership and all minimum government, maximum freedom Nebraskans will come out in droves for Governor Johnson’s campaign. We feel he is the only alternative to the Purple Party status quo of wars, inept fiscal stewardship and infringements on individual rights.
Note: The State Central Committee of Nebraska’s vote had one abstention: Mr. Randy Eshelman, Vice Chairman of the Nebraska Libertarian Party abstained due to his position on the Libertarian National Committee.
My add – IMO Gary Johnson is a heck of a better choice in 2012 than Obama! OBAMA!
One small point of contention. The concept of the participation rate showing that there are a large number of people no longer seeking jobs because of discouragement meaning that the lower unemployment number is not as positive as it may seem, may be technically correct but repeating that item every month is misleading. The first month of a lower rate, the participation percentage is a meaningful qualifier. The following months , unless the participation number has gone down significantly, it drops out as a factor in showing if the economy is improving. To add this factor in every month minimizes the actual month by month improvement. If participation percentage has not changed since last month then the lower employment rate has gone down in real time compared to last month. The fact that we have a participation factor unchanged at 64% means that the discouragement factor also remains the same as last month. That mean the .1 drop in unemployment is a real time decrease. It only takes on the false positive aspects if the participation number goes down as well.
That may be true, but that is only true if you contend that all of the hires are from the current pool of unemployed and none are from the longterm unemployed who are no longer counted in your workforce. Otherwise, they substitute for each other and a constant participation rate indicates people leaving the workforce or that the longterm unemployed completely failed to find employment. Which do you want to choose as an interpretation? If the drop is to be interpreted positively, and any change at all is to be had on solving the problems of the longterm unemployed, then the participation rate has to change positively as well. If it doesn’t, there is something still wrong with it and it needs to be mentioned.
That’s not fair. They MAY just be rounding UP to the nearest 200,000.
“If you spend the money in education, you get 26,000 jobs, as opposed to 11,000 jobs. So you get two and a half times more jobs spending on education than you do on the military”
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I’m not sure it is in the best interst of either party to make people in this country any smarter.
How many of these jobs are full-time and ongoing? Weren’t the majority just seasonal, low-paid, part-time, temp retail jobs?? Useful but not sustaining.
I doubt there is as big a difference as you think in “salaries”. What you are missing completely is profit. Its not a requirement to make a profit off of teachers salary, books given to students, etc. Bomb making is a much harder business to get into which means there is a premium expected.
I guess what I’m saying is that when you spend money on bombs a good portion of that is going to shareholders, CEOs, and other management while spending on education is more likely to go to workers e.g. teachers, janitors, etc.
The guys working in the munitions factories aren’t getting rich necessarily. The ones I know do alright, but not on the scale of 3 or 4 times teacher salaries.
I should also add that automation greatly reduces the impact of manufacturing salaries while teachers aren’t nearly easy to replace. Maybe its semantics, I just hate to see people blame workers when the benefits are going to the 1%.
Actually where I live the better salaries are outside of the munitions/defense sector. You wouldn’t think so but its true if only an anecdote.