This last week the Bureau of Labor Statistics announced the latest numbers on unemployment in the United States. Michael Lombardi on Forbes.com discusses what this announcement really means. To read his full article, click here.
The Bureau of Labor Statistics (BLS) reported that the “official” unemployment rate in the U.S. economy decreased to 7.5% in April. (Source: Bureau of Labor Statistics, May 3, 2013.) While this may give politicians and the mainstream media another reason to brag about “economic growth” in the U.S. economy, this jobs market report actually proves the opposite is happening.
What I see as the most important statistic in the jobs market report—the underemployment rate—actually increased. In March, underemployment in the U.S. economy was 13.8%; we found out this morning that underemployment increased to 13.9% last month.
In April, the number of Americans in the jobs market working just part-time increased by 278,000 to 7.9 million. These individuals are not working part-time because they want to; they are doing this because they can’t find full-time work.
Of all the unemployed in the jobs market, 37.4% have been out of work for more than six months. This number hasn’t been decreasing as quickly as it should. The longer these individuals stay away from the jobs market, the more difficult it will be for them to get back to work.
The number of people participating in the U.S. jobs market is in decline as well. In January, the labor force participation rate in the U.S. economy was 63.6%; in April, it declined to 63.3%.
Dear reader, the reason the “official” unemployment rate declined in April was because this statistic does not include all the people looking for work (they’ve given up looking) and because there has been an influx in low-wage-paying work added to jobs market. In April alone, more than 50% of the jobs created were in low-paying industries. For example, in April, 29,000 jobs were added in the retail trade sector, 38,000 were added in the leisure and hospitality industry, and 19,000 were added in the health care sector.
In 2012, 284,000 college graduates worked jobs that paid minimum wage—70% higher than just a decade ago. (Source: Wall Street Journal, March 30, 2013.) This is troublesome. As these college graduates take the low-wage work in the jobs market, those with less education are being pushed down even lower on the jobs market ladder. Grads made up 35% of all the minimum-wage work in the U.S. jobs market last year.
Today’s jobs market numbers are another excuse for the stock market to rally, when in reality, stocks are rising on $85.0 billion a month in freshly printed new money—money that is somehow finding its way back into the stock market.
I have to hand it to the “bear;” it continues to do a masterful job at convincing investors the stock market is a safe place to be again. Now, if only it were true.