Jobless Recovery? Try Again. The big (payroll) jobs announcement has arrived at last.

NRO ^ | April 02, 2004, 3:10 p.m. | Larry Kudlow

[.cnI redruM]

The blowout new-jobs number of 308,000 for March puts the lie to political charges by the Kerry Democrats that the U.S. is in a jobless recovery. This is the largest gain in monthly non-farm payrolls in four years.

More, for the first quarter of this year, 513,000 new jobs were created, with the Labor Department acknowledging significant upward revisions for the prior two months. At this pace, roughly 2 million new jobs could appear in 2004, a number that is certainly within shouting distance of the 2.6 million new jobs originally predicted by chief Bush economist Greg Mankiw. The administration walked away from this projection, but they should have kept their nerve.

Since 1970, the U.S. has created an astonishing 60 million new jobs. This calculates to 1.9 percent yearly increases in employment during a period of 3.2 percent annual gains in economic growth. If this employment trend continues, the level of non-farm payrolls will reach 132.1 million by the end of 2004 and 134.6 million by the end of 2005. Respectively, that equates to 2.1 million new jobs this year and 2.5 million in 2005. The non-partisan career staff at the Bureau of Labor Statistics has already forecasted 20 million new jobs by 2012.

Undoubtedly, Greg Mankiw calculated the numerous benefits of the 2003 Bush tax cuts when he first released his bold estimate. With tax rates slashed across-the-board on personal incomes, small businesses, investor dividends, and capital gains, both investors and workers now get to keep significantly more of what they save and earn. And when it pays more, after-tax, to work and invest, people do so. This is the incentive-reward effect that changes economic behavior. Since the tax cuts were implemented, the economy has grown at better than 5 percent annually, and the unemployment rate has dropped to 5.7 percent from 6.3 percent.

At the same time, broad stock indexes have gained roughly 35 percent, creating about $3.5 trillion of new wealth. The market value of all mutual funds has surpassed the prior peak reached in 2000. Along with rising home prices, family net worth has surpassed the record hit in early 2000.

This is beginning to look more like a traditional post-recession employment recovery. The March jump marks the seventh consecutive payroll jobs gain, for a total of 759,000 new hires, with 61 percent of U.S. industries reporting payroll increases — the highest percentage since July 2000.

Even the gap between the lagging business payroll survey and the stronger household survey of all people working is beginning to narrow. The household survey appears to be more sensitive to self-employed workers who have started their own Subchapter S or LLC (limited-liability corporation) businesses. Responding to lower income-tax rates, these entrepreneurs have registered 1.8 million new jobs since the end of 2002.

The day before Friday’s big jobs announcement, a widely-followed manufacturing index published by the Institute for Supply Managers registered its highest level since the end of 1983. Every industry group, including cars, electronics, and business equipment, cited increases in new orders and production.

Despite all this, economic pessimists keep talking about the outsourcing of jobs to foreign countries as a major obstacle to employment and economic recovery. They’re dead wrong. New data from U.S. international trade accounts show that there are more foreign companies investing in the U.S. to create new jobs here at home — a process known as insourcing — than there are American firms sending jobs overseas.

Analysts should take their blinders off and see how the combination of tax cuts and low interest rates, along with rapid productivity gains and a strong rebound in corporate profits, has once again put U.S. growth above growth in any other industrial country.

Sen. John Kerry, of course, wants to roll back the Bush tax cuts and penalize American corporations that sell to foreign customers abroad as well as U.S. consumers at home. While his tax-hike package effectively panders to left liberal interest groups inside the Democratic party — people who oppose free trade and wage class warfare on successful earners and investors — it would have a devastating effect on economic recovery and jobs growth.

In a recent poll sponsored by the Duke University business school, 64 percent of chief financial officers of U.S. corporations believe that Bush’s economic policies would raise gross domestic product more than Kerry’s. Duke finance professor John Graham, director of the survey, said “CFOs like free trade, they like low interest rates, and they like tax cuts . . . . They don’t like regulation and restrictions, but overall they think protectionism slows down economic growth.”

The CFOs must also love the latest jobs number. Who, outside of the Kerry Democrats, wouldn’t?

[expat_panama]

At least now we know where the talking points have been coming from.

[ninenot]

70,000 of the "new" jobs were in Gubmint or 'health and education' services. That's about 23%.

ZERO, repeat ZERO "new" jobs in manufacturing.

And another 89,000 in Retail and 'professional services,' another 28%.

If you think it's a triumph that Gubmint has added jobs every single month of the last two years, then, in fact, we ARE doomed.

And let's see what happens to the 'professional service' category when tax season is OVER.

[Skooz]

I just watched CNN Headline news and the talking head informed us that if all those people had not quit looking for work (because the economy's so bad) the unemployment rate would be "north of 7%."

I am not kidding. This wasn't a guest or an opinion piece, it was the newsreader.

[wny]

The spin will be....but they're not really good jobs

or....some people have three jobs becuase they're struggling to pay for tax cuts for the rich...

[jpsb]

Well, I am not willie, but I have been very critcal of Bush's economic policies. This is very good news, plus the upwards move of past reports, is also good news. Let's see if it lasts the quater, then I will eat crow.

[gogipper]

So the glass is three quarters full, and that's a bad thing???

[Eala]

Well, I am not willie, but I have been very critcal of Bush's economic policies. This is very good news, plus the upwards move of past reports, is also good news. Let's see if it lasts the quater, then I will eat crow.

I don't think there's a one of us who hadn't been critical in some area or another (and my own criticisms extend far beyond his economic policies). At our district caucus last weekend I even heard a conservative talk show host, chairman for the caucus, note publicly that he too has, um, his differences with the president but that we need to support Bush's re-election anyway. I say: Leave the crow dinners to the liberals.

But an interesting local element came from a now former co-worker (engineer) today. His job came to an end today, 7 months later than planned. We'd been acquired by a UK corporation and they had outsourced manufacturing (he was designing production test systems)... to Tennessee.

In any event, he knew the date was coming and had started looking around. He reports that even in the lousy economic climate in WA state --worst or nearly so in the country-- things are turning up, that there are a LOT more technical (embedded systems engineering) opportunities now in the Seattle area than there were just two months ago.

I'm hoping so. There are still far too many empty buildings in our "business park," though I'm seeing lots of sprucing up going on.

[familyofman]

"As for those who re-fi'd at variable rates: I know some did, but why would you with fixed rates so damned low?"

Don't know for sure, but there are a number of possible reasons. Even though the fixed rates for refi or home equity lines were/are low - the variable rates were lower - short term reduction in cost (with associated risk of course). A lot of folks just don't understand interest rate cycles - rates are low now - they will stay low - something like the increase in stock prices not so long ago9They can only go higher).
Yhe implications of an interest rate upturn could be a disaster for those that pressed the envelope on the payments with historically low rates.

[jpsb]

I worry a great deal about "free trade", I think we should do more to protect the American market, but I will be voting for Bush. Don't tell anyone, I am trying to keep it a secrete.

[familyofman]

Is that a donkey, mule, burro, or ass?

In reponse to another poster, the largest employer in the US is WalMart - who replaced Mikey D's. If you think those jobs pay as well as former largest employers (GM & autos, US Steel & other big steel) then you have to start sharing what you're smoking - it sure isn't one of my Camels.

[Jorge]

Kerry's timing is almost a bad as Gore's.
I wonder how much money he spent trying to tell Americans there are no jobs just in time for the job numbers to sky-rocket?

Anyway, I hope the big increase in jobs means the economic recovery has kicked into a self-feeding cycle....with about .75 million new jobs added since August...meaning more people with lots more money to spend increasing demand.... which in turn leads to more job creation.

Meaning this could turn out to be a very good year for Bush.

[TomEwall]

Who are 36% of CFO's that think tax increases, protectionism and more regulations would lead to greater prosperity?

[expat_panama]

Is that a donkey, mule, burro, or ass?

I'm not sure what the heck he is, but for those of us who grew up with Christopher Robin the image of Eeyore moping around like Nancy Pelosi  gave me a chuckle.  (Actual Pelosi quote from today's Wash. Times: "for too many families living through the worst job recovery since the Great Depression, [the economy] continues to be far too painful...").

FWIW, Wal-Mart with only 1.2 million is nowhere near the largest employer in the US-- I thought everyone know that the federal government with 2.7 million civilians (add a million or two military) beats them all hollow.  But hey, I'm one of the self employed, and at 10.3 million we outnumber all of them.  See for yourself.

Do I wish I was working in a factory at an average wage of  $13.27/hr instead of financial services (average wage $24.32)?

No.

Nancy Pelosi aside, the best paying jobs are not factory jobs (click here).   It's all in the attitude.  Here we have everything handed to us practically on a silver platter and we're struggling for reasons to grumble.  I know griping is fun, I can out gripe the best of them.  But it's not only unhealthy and unrealistic, but when you think of it being ungrateful before our creator is downright blasphemous.

[ninenot]

I'm an optimist by nature. On the other hand, a number of friends who are in business are being drained by the outflow of manufacturing to offshore locations. This has affected my business, as I serve that manufacturing-related marketplace.

Printers, CPA's, lawyers who have manufacturing-based practices--all are in pain and most have been so for about 2 years or more.

And to my original point: increases in Gubmint employment are NOT really good news. It's FDR/WPA stuff, except that the WPA was temporary.

[ninenot]

Depends on how Pelosi makes her case.

Certainly for those without a BA degree, factory work pays better than retail. Generally, but not always, the bennies are better in factory work, as well.

And for those who selected manufacturing as a profession, even with a BA/BS, "other fields" are not going to pay as well.

As usual, the largest difficulty faces those who have 30 years invested in a particular occupation, whether labor or professional--their transition, if possible at all, will be accompanied by significant financial sacrifice.

[jpsb]

You would use variable rates if you were not planning on owning the home for more then a few years. A fixer upper or speculation and such. Fixed rates are for the folks that are trying to buy a home to live in.

[jpsb]

Well the question that I always ask and never get an answer too is.

If EVERYTHING can be make cheaper over seas why make ANYTHING here. And I think that is what we are seeing, slowly the manurfactur of EVERYTHING will be done over seas and we will be a dirt poor back water nation what produces nothing but raw materials for more advanced nations.

Think I am wrong? Well we used to lead the world in innovations, but now we are down to just three areas where we lead. Computers, airospace and bio chemistry. I'm pretty sure we will lose our lead in computers (if we already haven't) to Asia and Europe is catching up fast in aerospace, China has targeted aerospace as well.

[expat_panama]

Certainly for those without a BA degree, factory work pays better than retail. Generally, but not always,

That certainly is what everyone is saying-- you're in very good company.  But these widespread fondly-held beliefs just don't match with actual salaries and job requirements:

Major Occupational Group	Employment		Mean Hourly Wage	Mean Annual Salary	Degree Required
	Number of people who work in this field	Percent of Total
Total	127,980,430	100
Office Admin Support	22,798,460	17.8	13.09	$28,900	None
Sales	13,418,770	10.5	13.91	$29,000	None, BA Preferred
Production	11,270,180	8.8	13.27	$27,600	None
Food preparation and service	9,917,790	7.7	8.04	$16,700	None
Transportation & material moving	9,410,340	7.4	12.77	$26,500	None
Education, Training and library	7,658,800	6	18.81	$39,100	BA, MA preferred
Management	7,212,130	5.6	34.04	$62,000	BA, MBA Preferred
Construction	6,239,250	4.9	17.05	$35,400	None
Health Care Practitioner	6,118,880	4.8	24.01	$50,000	BA, Prof cert
Installation, maintenance and repair	5,322,980	4.2	16.81		None
Business & Finance Operations	4,676,690	3.7	24.32	$44,262	BA
Building and grounds cleaning and maintenance	4,275,660	3.3	9.8	$20,000	None
Healthcare support	3,123,160	2.4	10.53	$22,000	None
Protective Services	2,958,050	2.3	15.64	$32,500	None
Computer & Mathematical Sciences	2,825,820	2.2	29.02	$52,800	AA, BA preferred
Personal Care and service	2,801,640	2.2	10.1	$21,000	None
Architecture & Engineering	2,489,040	1.9	27.08	$49,300	BA
Community and social Services	1,523,940	1.2	16.44	$34,200	None, BA preferred
Arts, design, entertainment,sports and media	1,508,730	1.2	19.12	$39,800	None, may require BA
Life, Physical and social science	1,067,750	0.8	23.9	$43,500	BA, MSW preferred
Legal	909,360	0.7	33.19	$69,000	BA, JD preferred
Farming, Fishing and forestry	453,010	0.4	9.44	$19,600	None

Nancy Pelosi may be a jerk when it comes to describing what's happening in the job market, but she sure is good at convincing everyone that she's right.  Go figure.. 

[ninenot]

Oddly, your table does not list retail.

Like it or not, career production managers who don't have a factory to run anymore are worth damn little on the market.

And, like it or not, IT professionals without projects to manage are ALSO worth damn little on the market.

Sure hope things reverse.

[expat_panama]

The table is BLS data on occupations, which is a little different than business sectors.  Both manufacturing and retail would use management, admin support, etc., but retail would have more 'sales' and manufacturing would have more 'production' workers.  The more we go into particulars the less labels make sense.  GM's biggest supplier isn't steel, plastic, or rubber-- it's insurance. 

What we do find is that for the vast majority, wages are going up and more workers are being hired.