The jobs market consists of employees and employers searching for and trying to attain a match for employment within a firm. The jobs market is not static, but is constantly changing as the needs of companies change over time. New technology means a different skill level in the workforce, demanding people within the jobs market upgrade their skills to remain employable. Conversely, if there is a shortage of workers in a specific area, then wages will rise for that sector. As with any market, the price (wages) is set by supply and demand.
Finally, some good news for the U.S. economy?
Last week, the U.S. Bureau of Labor Statistics reported 248,000 jobs were created in the U.S. economy in September, pushing the unemployment rate down to 5.9% from 6.1% the previous month. (Source: Bureau of Labor Statistics, October 3, 2014.)
The September jobs market report showed good job creation in sectors like professional and business services, information, mining, construction, and financial. Combined, these six sectors saw job growth of 130,000 jobs, just over half of all jobs created in the month. This is a fresh and welcome change over the past few years where we saw massive growth in low-wage-paying sectors like retail and food services.
While the news from this month’s jobs market sounds good on the surface, the reality is that there’s a severe problem with the employment situation in this country.
Long-term readers of Profit Confidential know I focus on the underemployment rate because it includes people in the jobs market who have given up looking for work and those with part-time jobs who can’t get full-time jobs. Look at that number (what I call the real unemployment rate) and you’ll see it still sits stubbornly around 12%…like it has for the past five years.
And the only boom I can find in the jobs market today is in part-time work! There are now 7.1 million Americans who are working part-time in the U.S. economy.
But the most troubling problem with the jobs market has to do with people who are leaving the jobs market.
In September, the labor force participation rate stood at 62.7%. This means that only 62.7% … Read More
Six years ago this month, in the midst of the Great Recession, Lehman Brothers, one of the most well-known investment banks in the U.S. economy, filed for bankruptcy.
At the time, Lehman’s bankruptcy sparked widespread worries…and the U.S. financial system teetered on the verge of collapse. For those of us who remember that time, there was too much uncertainty.
So, the Federal Reserve and the government stepped in to help the crumbling U.S. economy. Loans were made to companies that were “too big to fail,” interest rates fell to historic lows, and trillions of dollars in new money was printed (out of thin air).
Six years later, is the U.S. economy better off now?
Looking at Wall Street today, it looks like things couldn’t be better. The markets are close to all-time highs. The big banks are in better shape; their profits are rising and executives’ incomes and bonuses are big once again.
And speculation is back, big-time. As just one example, Facebook, Inc. (NASDAQ/FB) recently reached a market capitalization of more than $200 billion in hopes that the company will be able to make more money on mobile ads. Facebook is trading at a price-to-earnings multiple of 100!
The luxury market is hot again. Exotic cars are being sold at record prices. Sales of million-dollar-plus mansions are on the rise.
Sadly, on the other side of the coin, there have never been so many poor people in the U.S. economy, and the middle class hasn’t seen a return to the wealth and income they had before the Credit Crisis.
In 2013, 14.5% of the U.S. population was living at … Read More
A week ago today, the Bureau of Labor Statistics (BLS) released its jobs market report for the month of August. To say the very least, there was nothing in that report that says the labor market in the U.S. economy is back on its feet. In fact, the report painted a gruesome image of employment in this country.
In August, 142,000 jobs were added to the U.S. economy—the lowest monthly pace in 2014. And the jobs market numbers previously released for June and July were revised lower. (Source: Bureau of Labor Statistics, September 5, 2014.)
But this is just the tip of the iceberg.
Americans who have been out of work for more than six months continue to make up a significant portion of the total unemployed population—31.2% of all unemployed to be exact. Over the past few years, this number hasn’t really come down much.
What’s worse is that the labor force participation rate, that is the rate of those who are in the working-age population and are looking for work, stood at 62.8% in August. This is the lowest rate of labor force participation in the U.S. economy seen since the late 1970s! (Source: Federal Reserve Bank of St. Louis web site, last accessed September 5, 2014.)
Adding to the misery, and as I have reported many times in these pages, we are seeing more part-time jobs created than ever and job creation remains concentrated in the low-wage-paying sectors, like service and retail.
There’s another problem that doesn’t get much attention. Incomes in the U.S. economy are falling. According to a report by the Federal Reserve, median household … Read More
According to Fed Chairwoman Janet Yellen, “More jobs have now been created in the recovery than were lost in the downturn… the unemployment rate, at 6.2% in July, has declined nearly 4 percentage points from its late 2009 peak.” (Source: “Labor Market Dynamics and Monetary Policy,” Federal Reserve, August 22, 2014.)
Great news, right? On the surface, yes. But when you look closer at the numbers, the jobs market paints a very different picture as to what is going on in this country.
Prior to the Great Recession, in January of 2007, there were 4.24 million Americans who were working part-time because they couldn’t find full-time work. In July of this year, the number of Americans working part-time (because they couldn’t find full-time work) was 76% higher at 7.51 million. (Source: Federal Reserve Bank of St. Louis web site, last accessed August 25, 2014.)
The boom in the jobs market has been in part-time work! How do you feed a family with part-time employment?
But the jobs market misery doesn’t end there…
In January of 2007, the average duration of unemployment in the U.S. economy was 16.3 weeks. In July of 2014, this number stood at 32.4 weeks. Once unemployed today, people are taking over seven months to find another job—double the time it took to find a job before the Great Recession. (Source: Ibid.)
And let’s not forget that the “official” government unemployment numbers exclude those people who have given up looking for work. If we look at the jobs market and include those people who have given up looking for work and those who have part-time jobs because … Read More
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