March Employment Numbers Better Thanks to Government Hiring

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. We have coined this term to describe the current monetary and fiscal policies of the U.S. government, which involve unprecedented money printing. This is the official blog of the New York Investing meetup.


According to the latest government statistics, U.S. nonfarm payrolls increased by 162,000 in March. The headline unemployment rate was still 9.7% as was the case in January and February. The alternative unemployment rate ticked up to 16.9% however. Most hiring took place thanks to the Census, the health care industry, and the magic of seasonal adjustments - none of which indicate a recovering economy.

The U.S. census has really been the key to the better (or more accurately less awful) employment numbers for the last several months. According to the recent payroll report, the U.S. government hired 48,000 census workers in March. Hiring has been going on for approximately a year now, but has only been substantial since last fall. The Financial Times of London has reported that the government will be hiring 1.2 million workers for the 2010 Census - twice as many as were needed for the 2000 Census (think of this as a form of hidden government economic stimulus). Only a small fraction of this number has shown up in the employment figures so far, unless the hiring is being hidden in the Business and Professional category. There appears to have been about 50,000 extra temporary workers showing up there every month since last fall. A footnote indicates that this number may include workers from 'other' categories - one possibility for 'other' would be government.

The seriousness of the unemployment picture and how bad the economy actually is can be seen in the number of long-term unemployed (those without jobs for more than six months). This number increased by 414,000 in March to 6.5 million. Of the unemployed, 44.1% are now long-term unemployed. This number is much worse than in any other recession in entire post-War period. Another 9.1 million people are working part-time because they can't get full-time employment. Another 2.3 million workers are considered marginally attached to the labor force and not counted as unemployed because they didn't look for work in the last four weeks, but did do so during the last year.

So what made the 162,000 job gains possible in March? In addition to 48,000 jobs officially listed from the census, there were another 40,000 temporary help service jobs. Health care was the next biggest gainer with 37,000 jobs. Health care has been the only industry to consistently add jobs since the recession began in December 2007. It is not an economically sensitive industry. Leisure and hospitality added another 22,000 jobs, manufacturing 17,000 and construction 15,000. Seasonal adjustments, the government statistician's tool for turning a sow's ear into a silk purse, should be considered the source of extra employment in these industries. When I saw the figures, I wondered if the extra construction workers had been hired to build castles in the sky. To be fair, a case could be made that manufacturing and construction are gaining jobs now simply because there couldn't be any more unemployment in the short-term in those industries, both of which have been devastated during the recession.

Despite all the negative aspects to the employment report, including average hourly earnings falling 0.1%, the mainstream media trumpeted it as more evidence that 'happy days are here again' (the title of a song from the Great Depression). Coverage was filled with statements such as, "The increase is the latest sign that the economic recovery is sustainable and healing in the job market is beginning." Government hiring of census workers and more health care jobs (many of which are also government related) does not indicate a sustainable economic recovery. Instead, it indicates sustainable government spending to try to make a recovery look like it is taking place.

Disclosure: Not relevant.

NEXT: Don't Confuse Inflation With Economic Growth

Daryl Montgomery
Organizer, New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

Census Hiring Used to Manipulate U.S. Employment Numbers

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. We have coined this term to describe the current monetary and fiscal policies of the U.S. government, which involve unprecedented money printing. This is the official blog of the New York Investing meetup.


According to the Financial Times, the U.S. is hiring 1.2 million census workers for the 2010 national head count that starts in April - twice as many as were needed for the 2000 census. While census workers are government employees, they do not appear to be showing up under the government category in the monthly non-farm payrolls employment report (hiring began by March 2009). The Bureau of Labor Statistics appears to be counting these temporary jobs in the Business and Professional Services category. As a consequence, the employment numbers make the U.S. economy look much better than it really is.

The March employment report indicates that the U.S. lost 36,000 jobs in February and the unemployment rate was 9.7% if certain discouraged and forced part-time workers are not counted (unemployment would be 16.8% if they were included in the numbers). Any job loss indicates an extremely weak economy, but so does a small job gain. Since new workers are always entering the labor force, the total number of jobs available needs to continually increase, by as much as 200,000 a month by some estimates, in order to maintain employment stability. A lesser number should lead to a higher unemployment rate. Nevertheless, unemployment held steady in February and actually dropped significantly in January when 26,000 jobs were lost. Interesting, to say the least. Apparently two plus two doesn't always equal four.

Examination of the detailed numbers within the monthly employment reports reveals that the lower rate of job losses in the last several months can be attributed to the hiring of large numbers of temporary workers in the Business and Professional Services category. In February, a net 47,500 such workers were hired, in January it was a net 50,200 and in December 2009 a net 49,700.  The numbers are remarkably even and that makes them look like part of some planned operation.  A footnote indicates that these temp workers include hiring in 'other' industries not shown separately. At the same time, government jobs supposedly decreased by 18,000 in February and decreased by 26,000 in December 2009. If the 1.2 million census workers were being included in the government employment figures, this would indicate massive lay offs have been taking place elsewhere in the government. Surprisingly, it doesn't seem that any such lay offs occurred. So where are the census workers in the U.S. employment reports?

Everyone knows that increases in government jobs don't indicate a recovering economy. It is also common practice for businesses to hire temporary workers in the early stages of a recovery and then permanent workers later on. If the federal government's statistical operatives placed temporary census workers in the Business and Professional employment category, it would certainly make the U.S. employment picture look much better than it really is. Regardless of where the census workers are being hidden in the statistics, their jobs are temporary and should completely disappear by the fall. U.S unemployment will increase by 1.2 million when that happens. It's not clear where the U.S. will get the jobs to make up for the loss.

Disclosure: None

NEXT: Stocks Experience Irrational Exuberance on Employment Report

Daryl Montgomery
Organizer, New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.