The latest rosy national jobs picture is a "paint-by-numbers delusion" that hides a brutal erosion in the nation's employment picture, according to David Stockman, U.S. budget chief in the Reagan White House.
Stockman, not one to sugarcoat the failings of Washington, D.C. — or of the Federal Reserve in particular — said the delighted squeals of the "bubblevision commentariat" (his characterization of traditional financial TV coverage) about the October employment report were bogus.
"Well, now. Here we are nearing the end of 2014 and the nation's once and mighty 'jobs machine' is fixing to utilize no more labor hours this year than it did way back at the end of the 20th century," he wrote on his
Contra Corner blog.
Stockman, who knows his way around government data crunching, said the index of total labor hours in the non-farm business economy is at about the same level as way back in the third quarter of 1999.
"This means that during the 21st century to date the U.S. economy has been bicycling up-and-down an essentially constant amount of labor during the intervals between the serial financial market booms and busts engineered by our monetary politburo."
Stockman said the Fed's leadership should be required to answer why, even after inflating the nation's balance sheet debt from $500 billion to $4.5 trillion, its "monetary elixir has not generated a single additional labor hour in the nonfarm business economy for 15 years running."
While he noted that the October report showed gains in leisure and hospitality jobs and retail clerk positions, those were mostly part-time jobs at low wages, and he questioned why they should be considered by the government to be equal in the data to real full-time jobs at normal salaries.
"The headline jobs number is not the equivalent of a reliable index which measures the rate of change in labor inputs supplied to the U.S. economy. It is essentially a statistical anecdote. It not only counts 10-hour per week 'temp' gigs and real 50-hour jobs the same, but also ignores entirely the quality of hours worked as proxied by the hourly pay rate," Stockman explained.
"Sure, there may be some public policy purpose in getting a paycheck — however small — to as many citizens as possible. But that's a political objective. It can't possibly be a valid metric for measuring the economic condition of the labor market," he asserted.
Stockman's conclusion is that central bank policies reinforce a make-believe world instead of promoting real employment.
"They permit the government to fund with ultra low-cost bonds and notes a massive transfer payment system that keeps potential productive labor out of the economy, and thereby props up bloated wages rates; and enable households to carry more debt than would be feasible with honest interest rates and competitively priced wage rates…"
The employment report for October actually showed jobs growth falling off, with 214,000 new jobs and a 5.8 percent unemployment rate, according to
CBS Moneywatch.
"One ingredient that has been missing during the recovery is wage growth, which has barely kept up with inflation. Americans saw a meager 0.1 percent, or 3 cent, increase in their average hourly earnings last month, to $24.57. Wages have risen by only 2 percent this year," Moneywatch reported.
Elise Gould, an economist at the Economic Policy Institute, told
The New York Times, "We are adding jobs, but it is still a wageless recovery. The economy may be growing, but not enough for workers to feel the effects in their paychecks."
However, Michael Gapen, an economist at Barclays, was more optimistic.
"We think this is a very strong report," he told The Times. "We will see wage gains going forward. They just didn't show up in this report."
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