2 Steps Forward, 1 Step Back For Jobs As Fed Watches [Labor Participation Hits 38-year Low]

Investors Busniness Daily ^ | 07/02/2015 | ANDREA RIQUIER,

[expat_panama]

Job gains stayed healthy in June and the unemployment rate hit a seven-year low, but workforce participation skidded and wage growth remained anemic, muddling views of the labor market for a central bank seeking clarity.

Employers added 223,000 jobs, the Labor Department said Thursday, about as many as economists had forecast, and the jobless rate fell to 5.3% from 5.5%. The number of people working part-time because they can't find full-time work fell, as did the number of long-term unemployed.

But 432,000 people left the workforce, and the labor force participation rate fell to 62.6%, the lowest since 1977. Wage growth, which economists had expected would accelerate to an annual rate of 2.3%, instead dipped to 2%.

"It was a touch disappointing," said David Rosenberg, chief economist for Gluskin Sheff. "Nice jobs, shame about the wages."

Rosenberg and other analysts have been consistently frustrated by the sluggish pace of income growth in the current economic expansion. Most think stronger wage gains are critical for more robust growth, to bolster everything from retail sales to home purchases.

Still No 'Smoking Gun'

That's a view Federal Reserve policymakers share. While most central bank watchers believe the first rate hike will come in September, Rosenberg has long believed policymakers' bias toward caution will delay "liftoff" until 2016.

"Only a fool would rule out September," he said. "But based on what they're telling us, I don't see the smoking gun. Does the Fed have runaway economic growth that it has to lean against, burgeoning inflationary pressure, an asset bubble? The answer is no."

Alan Levenson, chief economist for T. Rowe Price, was a bit...

[ProtectOurFreedom]

Rush does a remarkable job on economics considering he’s had no formal training in the area. Analysts were blaming the aging of the workforce and retirees stopping working as a cause of labor force participation decline. Rush rightfully called them on that saying people are having to work longer and put off retirement due to the crappy economy caused by Obama. That was an excellent point.

Rush is perfectly clear on the math of labor force participation, but he gets the gist right and hammers them on the false hopes created by the completely useless and bogus unemployment rate.

[ProtectOurFreedom]

The most wonderful thing of all is we will reach zero unemployment when nobody has a job. Welcome to Obamaville.

[grania]

The most wonderful thing is we will have zero unemployment when nobody has a job.

Following the logic of these surveys, when nobody has a job or wants one, that's 0% unemployment and 100% of the workforce employed.

Welcome to Obamaville

I disagree with trying to imply that one political party is better than the other. It's more like the elites (both political parties) have gone full-tilt-crazy fascist.

We don't matter. We're merely a cash crop for the elite, a "pawn in their game".

[ProtectOurFreedom]

Some interesting anecdotal data from the POF household:
* Our 3 kids are in mid to late 20s, all college graduates with good, no-nonsense degrees. All three have found it remarkably easy to get good paying jobs after graduating. One has changed jobs twice, one once, and one went back to school after working for a while.
* Most of their friends have the same experience. Some have real high power jobs already.mcompanies range from big consulting firms to Apple, LinkedIn, and Facebook to small startups.
* Most are working in western states (we are in CA), but some have moved to Austin, Houston, Boston! NYC, Chicago.
* Kids are finding a lot of high tech employment opportunities.
* Cost of living in CA is a killer. Kids that stay here must share a house to cover rent, but that’s always been the case in your 20s. Kids are leaving CA because of obscene housing costs.
* A new graduate relative on the east coast (biomedical engineering) is having a real hard time finding work.
* Colleagues in their 50s and 60s that lose jobs are not doomed, but it often takes up to two years to find a job.

Admittedly, this is a biased sample of young people raised in high-achievement families with excellent school systems. But at least this cohort isn’t having much trouble getting careers launched.

[ProtectOurFreedom]

Generally agree that both parties share blame, but a HUGE amount of blame goes to Dems and particularly Obama the past seven years. Obamacare is a huge factor in this mess. Plus millions of job-killing regs from this monstrous regulatory state are the big culprit.

[grania]

Almost everything Obama has done started out under the administration of GWB and was either approved or not stopped, judicially or legislatively, by Republicans.

When those who are my enemy and those who are in their position to defend us both do us harm, I'm going to put primary blame on those who were in a position to stop the evil, but instead decided to profit from it.

There will always be evil. The question is if there's any good among the ruling class willing to fight it.

[semimojo]

“At the present time, there are 210 million adult Americans between the ages of 16 and 68—to take a plausible measure of the potential work force. That amounts to 420 billion potential labor hours, if we accept the convention that all adults are at least theoretically capable of holding a full-time job (2,000 hours/year) and pulling their share of society’s need for production and work effort.

By contrast, during 2014 only 240 billion hours were actually supplied to the US economy, according to the BLS estimates. Technically, therefore, there were 180 billion unemployed labor hours, meaning that the real unemployment rate was 42.9%, not 5.5%!”

I guess there's a point in there somewhere but assuming everyone works full time from when they turn 16 (no one in senior high or college?), no one retires until 68 and everyone in the military also has a full time job is so unrealistic that it makes the stats meaningless.

[Vaduz]

The chimps like it that way it’s why they voted for Obama twice and they are still waiting for the gravy train to arrive.

[ProtectOurFreedom]

I disagree that it is meaningless. It is always good to understand your operating envelopes e limits. The calculation is obviously the upper limit of ms hours that are available to the economy. You will never get there because, as you point out, people can be students, between jobs, opting to stay home and raise kids, etc. but it would be an interesting stat to track for trends.

[P.O.E.]

Thanks for the Bastiat quote. I’ve been reading some of his works lately, and they are spot on.

The logic he uses would be lost on most of today’s college students, I’d bet.

[expat_panama]

Rush does a remarkable job on economics

imho he's the absolute authority on sports, broadcasting, and politics (in that order), and he's so so with current events, history and science, but he's totally willfully clueless with economics, education, and raising kids --and those three are things he's somehow decided he's a flippin know-it-all.  Here are three examples from a long list of his pitiful econ blunders:

• The inflation rate calculations leave out food and energy.
• The Fed's bail-out QE's are what's supporting the stock market.
• There is a single true unemployment rate that the bean-counters are hiding.

[CPT Clay]

Would you include me in your ping list?

[Popman]

Colleagues in their 50s and 60s that lose jobs are not doomed, but it often takes up to two years to find a job.

Yup...unemployed for eight weeks now...at 56 years old.

Got real tired of sending out resume's and cover letters, then waiting three to four weeks to get a rejection email. I got eight last week...

I figured if I'm going to have to live off my saving for a year or more, I might as well take that money and buy a business in my field...

I spent 30 years plus making my employers tons of money in my field and decided to take all that experience and use it for ME...

[semimojo]

...it would be an interesting stat to track for trends.

I don't see what this adds to the conversation that you can't get from the labor force participation rate that we're discussing. Obviously Stockman is going for shock value but the number doesn't tell us anything useful for making policy.

If he had a serious economic point he would state what he considers "full employment" under his scenario. It's obviously well over 20% unemployment just to account for students and stay-at-home spouses who aren't looking for outside work.

I said it's meaningless because he doesn't tell us whether his 43% number is good or bad, let alone how close to full employment it is.

[expat_panama]

done!

[1010RD]

Where’s Wyatt’s Torch when we need him?