The Slowest Jobs Recovery Since the Great Depression Hits a Little Part-Time Speed Bump

Americans aren't working as much as they were in 2008, and many of them are stuck in lower-paying jobs.

Apr 4, 2014 at 1:13PM

The Bureau of Labor Statistics released its monthly employment report this morning, and investors have found little to cheer -- the Dow Jones Industrial Average (DJINDICES:^DJI) fell nearly 0.4% in the afternoon after opening with a small pop. The report was rather disappointing -- economists (and this columnist) generally expected a tally of 200,000 new jobs, but were instead served with a preliminary figure of 192,000. That by itself isn't necessarily enough to stoke fear, but there were other worrying trends in today's jobs report, some of which have received far less attention than they deserve. Let's take a look at the guts of the jobs report to find out why Wall Street doesn't think the new numbers are worth getting excited over.

Headline number: 192,000 new jobs added
Along with the new jobs estimate for March, the BLS also revised employment figures upward for January (from 129,000 to 144,000) and for February (from 175,000 to 197,000). These two revisions added another 37,000 jobs to 2014's tally, but that's barely a drop in the bucket of a 156 million-strong national labor force.

While this latest report fails to push the BLS' data over the peak of 138.365 million nonfarm employees set in January 2008 -- contrary to Wednesday's ADP jobs report, which showed a new record for private-sector employment -- it pushes the economy to striking distance of that total. The current employment tally of 137.928 million Americans is 437,000 employees away from 2008's record jobs total, and a new record should be attainable in the May or June jobs report, barring any unexpected downturn. This month's update continues a general trend that's been quite stable for the last few years -- monthly job gains have quite often been near the 200,000 mark:

Estsurveyaddsmar
Source: U.S. Bureau of Labor Statistics.

Some parts of the American economy had a larger impact on payroll growth than others. The BLS' sector-by-sector breakdown gives us a rather clear picture of where the jobs are coming from:

Sectorjobaddsmar
Source: U.S. Bureau of Labor Statistics. Totals may not match due to sector omissions.

Traditionally low-paying sectors -- retail and the leisure and hospitality sector -- continue to drive gains in employment, with the broad-based "professional and business services" sector leading the pack with 57,000 new jobs added in March. Construction employment surged again as the housing crash moves farther in our economic rearview mirror, but the government was a nonfactor this month, which is still better than being a drag on employment (as government layoffs have been an ongoing employment issue). The leading Dow components today reflect the relative strength of their industries: Johnson & Johnson (NYSE:JNJ), which is the dual beneficiary of retail strength and health-care stability, and Coca-Cola (NYSE:KO), the purest play on "consumer discretionary" on the blue-chip index.

Unfortunately, there was some bad news hidden in this month's jobs report. After months of declines in the part-time labor force, the BLS reported a spike of 414,000 new part-time workers in March, which was the largest monthly increase in nearly two years:

Blsparttimeaddsmar
Source: U.S. Bureau of Labor Statistics.

This could just as well be an aberration, as it was a year ago, but the part-time picture in the American workforce is far from rosy. The financial crisis resulted in a spike in the number of part-time workers as a percentage of the labor force, and this has remained elevated ever since. In fact, it might be said that the "part-timing" of American jobs has held back a stronger workforce recovery, as the number of full-time equivalent jobs -- calculated by combining total employment by average hours worked, and then dividing that figure by 40 -- is a bit further away from full recovery than the baseline employment figure:

Parttimefulltimemar
Source: U.S. Bureau of Labor Statistics and author's calculations.

Full-time equivalent jobs peaked in March 2008 at 119.888 million, and the latest figure of 118.963 million full-time equivalent jobs is nearly 1 million short -- more than twice the gap between today's baseline nonfarm employment number and its 2008 all-time high. Average weekly hours, at 34.5 per worker, aren't far off of the 34.7 hours per worker recorded six years ago, but when you add up a fifth of an hour across more than 100 million workers, it makes a very big difference in the amount of time Americans actually spent on the job.

The BLS report also disappointed economists and investors who were hoping for unemployment to decline. Another 27,000 people were added to the unemployment total in March, continuing a reversal of the unemployment declines that had persisted for seven consecutive months until February. The baseline unemployment rate was unchanged at 6.7%, but the U-6 rate (which includes barely there workers and part-time workers who would rather work full time) ticked up to 12.7%. The U-6 rate has remained above 10% since June 2008. Another problem for the American labor force is the declining but still persistently high number of long-term unemployed people:

Blsunemploymentmar
Source: U.S. Bureau of Labor Statistics.

This report wasn't terrible, but it certainly wasn't great. Americans are still working less than they were in 2008. Many of the jobs they're finding don't pay a whole lot of money. And millions of people continue to go many months without ever finding a job. Today's reaction from the market's largest and most durable stocks is about right -- it's disappointing, but not extremely so.

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.

The Motley Fool recommends Coca-Cola and Johnson & Johnson. The Motley Fool owns shares of Coca-Cola and Johnson & Johnson and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers