Why Jobs are Not Just About Jobs

So we have 10% unemployment if you go by the official estimate, and the all-in estimate is 17.3%, which includes marginally attached workers (who haven’t looked for a job in the past month) and those who are working part-time but want to work full-time.

The numbers don’t surprise me, because when you take a look at the broader landscape, there’s no way anyone can tell me there’s a sector out there that’s looking to add jobs in a meaningful way. Not construction, not retail, not manufacturing (even though the pace of decline is slowing significantly).

Oh by the way, the addition of temps are the new normal. With healthcare reform weighing on businesses, and the overall weakness in the economic backdrop when you consider everything else from housing to commercial real estate to credit, there will be a lot of reticence to hire new full-time workers, unless it’s absolutely critical.

As bad as the numbers were, they could’ve been worse:

I circled the “Not in labor force” number, which grew by 843 thousand. If they were still in the labor force, we could have a 10.4 to 10.5% print. There’s a whole list of reasons this number was as big as it was. On one hand you have retirees that are leaving and probably won’t return (face it: if you feel good about retiring in this environment, you’ll feel good retiring in any environment), but at the other end of the spectrum, you have younger workers that might be throwing in the towel on finding a job now, but may return to the labor force later.

And of course the breathtaking chart of the day is the employment ratio. This one chart probably shows the aggregate effects of what I just described:

The question that should be on everyone’s mind is this: Is this cyclical or is it secular? Because baby boomer retirements is very much a secular trend: people get older and they retire. But the question about younger workers is a very serious one. Because the longer they stay out of work, the economy loses something more than potential output.

It loses human capital. Human capital is a function of time, education, and other factors. But the younger workers need to be working or getting training somehow. Because sometimes those experiences lead to economic breakthroughs. Breakthroughs that lead to better standards of living for everyone.

But that can’t happen if folks are moving back home with mom and dad, playing video games and watching American Idol, waiting for the landscape to get better.

The idle time is like death by asphyxiation.

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Filed under macro, Markets, Way Forward

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