7.5% unemployment sounds good. If Nevada’s numbers follow the national trend then we’d expect another decrease in statewide unemployment, also a good thing. However, we need to temper our enthusiasm with a nod to some other numbers which aren’t quite so reassuring.
Not all employment is created equal: “The workweek fell from 34.6 to 34.4 hours. As a consequence the index of aggregate hours worked fell -0.4%, offsetting last months 0.4% increase.” [AB] [BLS table B4] It’s fine to have more people working, but if they are working fewer hours then the amount of spending those families can afford doesn’t move the needle in terms of aggregate demand.
Not all wages are created equal: There’s weakness in average hourly wages as well. Average hourly wages were $23.42 in April 2012 and a year later they’d ticked up to $23.87 — insufficient to keep up with inflation. [BLS Table B3] Leisure and hospitality wages, which are of interest to Nevadans, averaged $13.35 per hour in April 2012 and increased to an average of $13.42 as of April 2013. [TableB3] Rather an underwhelming increase.
Public Sector employment remains weakened: For the “Drown Government in a Bath Tub” crowd this is taken as good news, but the problem is that public sector employees are also consumers and their contributions to aggregate demand are declining. Overall employment at all levels was down 11% since March 2013. This figure breaks down to a decline of 8% in federal employment, a 1% decline in state workers, and a 2% decrease in local government employment. [BLS TableB1] At some point in the discussion we need to ask just how small the bathtub is supposed to be?
If we exclude radical libertarian ethereal musings about an entirely privatized system in which we all drive on toll roads the moment we leave the driveway, or all hire our own security and fire protection services, and all our schools, libraries, parks, and public health services are for-profit institutions in which you can get only what you can afford to pay for — then we need to specify which public services we expect, and what level of service is acceptable. How long are we willing to wait for our IRS tax refund checks? How long is an acceptable response time for police and fire calls? How many days should the library be open? How many children in a single classroom are acceptable? How long should it be between health inspections in work places, medical service providers, restaurants?
Not all jobs are creating assets: The Construction sector continues to be weak, with YOY nonfarm payroll numbers down 6%, with residential construction down 6.2% and non-residential construction off by 4.8%. Heavy construction and civil engineering was down 3.8% since last March. [BLS TableB1]
Given the state of our nation’s infrastructure the decline in heavy construction and civil engineering projects is particularly disturbing. The President’s Rebuild America Partnership proposal remains mired in Congressional inattention, and partisan bickering. S. 387, a bill to establish an American infrastructure investment fund was introduced in the Senate last February, and now sits in the Senate Commerce, Science and Transportation Committee. The website for this committee doesn’t show any hearing scheduled for this bill to date.
One of the nicer features of infrastructure investment is that it is a Win-Win proposition; engineers, contractors, and their employees get paychecks and the contracting agency gets valuable assets enhancing the unit’s overall financial position. Senate inaction, exemplified that the body only managed to pass 2% of the bills put before it so far, isn’t helping our economy by assisting in the creation of construction sector jobs or by aiding the financing of public agency assets.
Not all jobs are full time: Full time employment is obviously distinct from long term temporary or contracted employment.
What’s changed in the last 20 years is that there’s been an unraveling of job security in the labor market, as well as a diminishment of benefit packages and a deterioration of stable, reliable wages and promotion pathways,” said Katherine Stone, a law professor at the University of California, Los Angeles, and labor specialist. “There’s been a really fundamental shift in the nature of employment — it’s a sea change. Whether you’re talking about the expanded use of short-term employees, temporary workers, project workers, contractors or on-call workers, the use of workers who don’t have regular jobs has increased a lot.” [CBS]
Regular, traditional long term employment, increases the inclination to secure more expensive long term assets — durable goods and housing. The employment numbers may mask a situation in which we have more people employed, but not in jobs that induce them to make personal investments in durable goods or in long term housing. While independent contractors may, indeed, prefer project to project employment — there’s the other 50% of temporary workers who would prefer full time employment.
In April, the number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 278,000 to 7.9 million, largely offsetting a decrease in
March. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.) [BLS]
The good news from the unemployment report this month is offset by weakness in the wages and hours figures, nor is it enhanced by the acknowledgement of continued weakness in the construction sector and the inattention to our infrastructure investment needs. Additionally, we need to carefully monitor the trends toward temporary job creation as compared to more permanent jobs created as a result of increased aggregate demand.
Congress could help. It could, for example, take up the American Jobs Act instead of attending to a plethora of ceremonial votes to “repeal Obamacare,” and continue its “War on Women.” The Senate could assist by scheduling hearings and giving consideration to S. 387.
If we’d like even more optimistic news on the economic front it will probably be up to American citizens to insist that our federal legislators focus on JOBS, JOBS, JOBS.