August's Employment Report: More of the Same

The economy created 169,000 jobs in August. That's nearly identical to the average number of jobs created each month for the last three years. 

More of the same. 

The figure was below estimates, with nearly all the gap between estimates and what was delivered due to a single industry: movie production, possibly linked to a temporary shutdown of the nation's porn industry last month. That's an indication of how volatile these numbers are, and a reminder of how detached they may to the strength of the broader economy. Few commentators bother to mention this imprecision and volatility, and instead reported on the "big miss" in jobs numbers. 

More of the same. 

June and July's job figures were revised down. Quite substantially, too. Nearly every month is revised. This is another reminder that today's jobs number may have no relation to economic reality. Still, analysts lined up to offer their detailed assessments. 

More of the same. 

Americans working part-time for economic reasons fell by more than 300,000 to one of the lowest levels in five years. None of the hundreds of news stories published last month about the surge in part-time workers will be revised. 

More of the same. 

The more familiar you become with the monthly jobs report, the more resigned you become to its lack of relevance. It tells you broad trends when viewed over multimonth periods, but never precision in any given month.

It sounds cynical, but I've come to believe that detailed monthly employment data serves only two people: Those who are being fooled by it and don't know it, and economists and journalists who understand its limitations but feel an obligation to have an opinion and provide analysis. 

The broad trends we know from the jobs market are this: 

  • Things are getting better slowly. Enough jobs are being created to keep up with population growth and bring unemployment down by a little bit.
  • A falling percentage of Americans are taking part in the labor force, largely due to demographics and education, but also because the scars from the Great Recession left some permanently damaged and caused them to give up looking for work.
  • The employment hole left by the Great Recession was so deep that it will likely be years before the job market is back to normal. 

More of the same. 

Spend more time worrying about things you can control and are meaningful -- the decisions you make with your money, your career, and how you spend your free time -- and less on things you can't control that are likely flawed, like monthly jobs reports. 

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  • Report this Comment On September 06, 2013, at 4:41 PM, Libertarian71 wrote:

    1. Sorry, Morgan, but the surge in part-time employment is not "overblown," as you claim. 96% of the "new jobs" this year are part time. 848,000 jobs were added, and 813,000 of them were part-time. http://gregmankiw.blogspot.com/2013/09/a-striking-labor-mark...

    (I would like to see some data or estimates on how much of this is attributable to the Affordable Care Act.)

    I do not understand how you can claim that this development is consistent with "things are getting better slowly." No they are not.

    2. Similarly incorrect is your assertion that "Enough jobs are being created to keep up with population growth and bring unemployment down by a little bit."

    No. Population growth is outpacing job growth. http://economix.blogs.nytimes.com/2013/09/06/population-grow...

    3. It is good to see you acknowledge, however, that the unemployment rate is "declining" because a growing share of the nonworking population has given up hope and is not even seeking a job.

  • Report this Comment On September 06, 2013, at 5:25 PM, kyleleeh wrote:

    <<I do not understand how you can claim that this development is consistent with "things are getting better slowly." No they are not.>>

    Because adding 813k part time jobs is an improvement from losing 8 million jobs. Math is not complicated, even if you count part time jobs as a half of a job 407k is still a larger number then negative 8 million.

    <<2. Similarly incorrect is your assertion that "Enough jobs are being created to keep up with population growth and bring unemployment down by a little bit."

    No. Population growth is outpacing job growth. >>

    Overall population growth is increasing but boomers are leaving the job market at a increasing rate, so we don't need to create as many jobs to absorb new comers as we did in the past.

  • Report this Comment On September 06, 2013, at 5:53 PM, Libertarian71 wrote:

    "Because adding 813k part time jobs is an improvement from losing 8 million jobs. Math is not complicated, even if you count part time jobs as a half of a job 407k is still a larger number then negative 8 million."

    I would not call that "getting better." I would call that "stagnating." 63 out of 100 adults had jobs before the recession. Now 59 do. But you're right, math is not complicated.

    "Overall population growth is increasing but boomers are leaving the job market at a increasing rate, so we don't need to create as many jobs to absorb new comers as we did in the past."

    Yes, that is one way to spin it.

  • Report this Comment On September 06, 2013, at 6:39 PM, neelvk wrote:

    Gregory Mankiw claims that taxes make him work less but then he continues to live in Taxachusetts. The guy is not an economist, he is a charlatan.

  • Report this Comment On September 06, 2013, at 7:46 PM, stevews99 wrote:

    More of the same. Ignore silly things like employment reports because they don't fall in line with the liberal meme. Why don't you review this "recovery" compared to previous downturns and tell us what the difference is (rhetorical question alert). I'll save you the ink...it's the socialist policies of the current bankrupt (literally) administration. It amuses me no end that a web site claiming to be a proponent of free enterprise supports the antithesis of the philosophy that made this country great. We have about 38 more months until we can begin the REAL recovery.

  • Report this Comment On September 06, 2013, at 9:36 PM, kyleleeh wrote:

    <<I would not call that "getting better." I would call that "stagnating.">>

    Stagnation would be if we lost 8 million jobs and then stayed there. You are clearly confusing the words "improving" with "fully recovered" Allow me to assure they are not the same thing.

    <<Yes, that is one way to spin it.>>

    it's also what's acctually happening, and was predicted to happen by people studying dempgraphics years before the recession hit. I don't even need to look at data to see it, it's right in front of me everyday...for every person person I know who has "given up looking for work" during this recession I know 3-4 who have retired voluntarily.

  • Report this Comment On September 06, 2013, at 10:57 PM, optimist911 wrote:

    10,000 porn workers lost their jobs? I wouldn't call that "more of the same" by any stretch.

  • Report this Comment On September 07, 2013, at 4:47 AM, Libertarian71 wrote:

    "Stagnation would be if we lost 8 million jobs and then stayed there. You are clearly confusing the words "improving" with 'fully recovered' Allow me to assure they are not the same thing."

    When 96% of new jobs are part-time jobs, Morgan and you can call it what you want, but I am not calling it "improvement."

  • Report this Comment On September 07, 2013, at 6:46 AM, kyleleeh wrote:

    <<When 96% of new jobs are part-time jobs, Morgan and you can call it what you want, but I am not calling it "improvement.">>

    And in doing so you demonstrate why most investors buy high and sell low. You refuse to recognize that the tides are changing and will probably continue to insist that things are terrible right up until they become perfect again, which will give you just enough time to buy over valued assets just before things become bad again.

  • Report this Comment On September 07, 2013, at 9:13 AM, TeeeMann wrote:

    Let's see. We have 10,000 baby boomers that retire every day. An average of 30 days in a month gives us 300,000 retirees. 170,000 new jobs created each month. Looks to me like we lose 130,000 jobs per month.

  • Report this Comment On September 07, 2013, at 9:18 AM, TMFHousel wrote:

    ^ The number of jobs created is net, not gross.

  • Report this Comment On September 07, 2013, at 6:30 PM, southernshark wrote:

    Buying high and selling low would equate to buying now after the run up we have had in the stock market, or at least that is how I see it.

    As for jobs, the market is terrible. Sure there are a few bright spots such as technology. But for those of us in Gen X, born too early to realize that the party was over, but too late to do anything about it, there is no recovery. At least kids today realize that they must major in computers or science to succeed, or they should anyway (although I still meet bushy eyed poli-sci majors who plan to go to law school....).

    What effect that has on the broader economy is debatable I suppose. But it strikes me as a long term downtrend. The effect of part time only employment is, in itself, detrimental to the economy, especially given how many of those unemployed have large student loans which are either being paid at a personal cost, being delayed, or being defaulted on created a whole subclass of our society who will effectively never invest and never have the ability to start a business.

    And that last sentence is the real nail in the coffin of the economy. Past recessions and depressions were always escaped from by new business. Relying on pre- collapse corporations to come back and fill the old void is just not supported by historical reality. You have to have entrepreneurs and right now the US has sucked the life out of them. I'm not just blaming Obama, although he shares the blame, but you could see this developing all the way back to 1999.

  • Report this Comment On September 08, 2013, at 4:26 AM, Libertarian71 wrote:

    kyleleeh said: "And in doing so you demonstrate why most investors buy high and sell low. You refuse to recognize that the tides are changing and will probably continue to insist that things are terrible right up until they become perfect again, which will give you just enough time to buy over valued assets just before things become bad again."

    Huh? What was the segue to investment discussions? I thought we were talking about the anemic jobs numbers that you are so excited about. And who made you an authority on asset valuation?

  • Report this Comment On September 08, 2013, at 6:03 AM, kyleleeh wrote:

    <<Huh? What was the segue to investment discussions>>

    When you clicked on the motley fool, that's when...what did you think this site was for?

    << And who made you an authority on asset valuation?>>

    assets are valued on the free market, which makes all of us authorities.

  • Report this Comment On September 08, 2013, at 7:26 PM, Libertarian71 wrote:

    "When you clicked on the motley fool, that's when...what did you think this site was for?"

    This was an article about the August jobs report. From there, you transitioned, without any segue, to a comment about how I supposedly "demonstrate why most investors buy high and sell low." I never claimed, and you have no idea of knowing, whether macroeconomic factors have any influence on my investing. (Here is a clue: they do not).

    "assets are valued on the free market, which makes all of us authorities."

    I agree with that sentence, up until the first comma. I am not certain that you rather than the market is a better judge of the value of an asset.

  • Report this Comment On September 09, 2013, at 1:42 AM, SkepikI wrote:

    hmmm, I was more struck by the August and annual charts that seemed to show the exact trend line in both unemployment and "employment participation" it seems we have been in a 6-12 month trend where the reduction in unemployment is nearly exactly from those leaving the labor force. The trend lines make me suspicious of the NET job increase numbers, as does the depressingly reliable revisions downward.

    While suspicious of all of BLS statistical methods, I also note that they say the unemployment rate for those who have a BS degree or higher is under 4%.

    What this all portends may only be revealed to wizards studying goat entrails, but it seems those willing to adapt might do better than those inclined to give up. I hear unemployment in Williston ND is so low it can't be measured, but you have to live in a tent.....

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