A Disconcerting Jobs Report
Source: GENE EPSTEIN
Start with the upbeat weather news: The recent polar vortex that caused record-low temperatures across the U.S. (prompting prayers for the return of global warming) struck before the period covered in the January survey of employment by the Bureau of Labor Statistics. That unusually cold weather should therefore have negligible impact on the January jobs report, due to be released by the BLS on Feb. 7.
But frigid temperatures in December probably did help depress gains in nonfarm payroll employment to just 74,000, as reported by the BLS on Friday. One clue: Employment in construction, which tends to be very sensitive to weather, fell for the first time in seven months. Another clue: 273,000 people were off the job due to weather this December, compared with 84,000 in December 2012 and 127,000 in December 2011.
Even without the bad weather, however, gains in employment would still have been on the weak side. But this followed a few months of relative strength. With an upward revision to November of 38,000, six-month gains through December have run at a reasonably solid monthly average of 170,000.
The unemployment rate fell to 6.7% from 7.0%. But there was no decline at all in the broadest measure of unemployment, known as U-6, which includes millions of folks who work part-time but are seeking full-time jobs. In proportionate terms, the gap between U-6 and the official rate of unemployment is the widest since the Bureau of Labor Statistics began tracking U-6 in 1994. That is disconcerting.
ALSO DISCONCERTING: The decline in the labor-force participation rate -- or at least, a substantial part of it.
The labor-force participation rate tracks the percentage of the civilian non-institutional population age 16 and over that is in the labor force, either by having a job or actively seeking work. In December, against a civilian working-age population count of 246.7 million, the labor force came to 154.9 million, for a participation rate of 62.8% -- a 35-year low. In December 2012, the rate stood at 63.6%. And against the population count of 246.7 million, the 0.8 of a percentage-point decline means that nearly 2 million workers are among the missing.
In a free society, even a huge decline in participation isn't necessarily a bad thing, not to mention that many people pursue meaningful work, such as raising children, outside the conventional job market. At least half the decline in participation is due to retirements of baby boomers, who range in age from 50 to 68 this year.
But other causes are more difficult to accept with equanimity. For example, as documented by Charles Murray in his 2012 book Coming Apart, there has been a huge increase in the share of people qualifying for federal disability benefits, even though greater safety in the workplace should have led to a decline, rather than a rise. Last week's scandal involving disability fraud in New York by 106 offenders, including 80 retired police and firefighters, was a grim reminder of this trend.
The labor-force participation of men age 25 to 54 stood at 88% in December, down from 88.5% in December 2012 -- a half-percentage-point decline that leaves nearly a third of a million prime-age men unaccounted for. Hard to believe that they have all become stay-at-home dads.
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