Jobs ... Really?

Today the Bureau of Labor Statistics came out with its jobs numbers for April:

Nonfarm payroll employment was little changed in April (-20,000), following job losses that totaled 240,000 in the first 3 months of the year, the bureau of Labor Statistics of the U.S. Department of Labor reported today. The unemployment rate, at 5.0 percent, also was little changed in April. Employment continued to decline in construction, manufacturing, and retail trade, while jobs were added in health care and in professional and technical services.

Market pundits were expecting job losses of 75,000, so the 20,000 loss should be good news, right? Wrong. Consider the following:

First, let's look at manufacturing and construction.

In April, employment in construction declined by 61,000, with losses continuing throughout most of the sector. Since its peak in September 2006, construction employment has fallen by 457,000.

Manufacturing employment fell by 46,000 over the month; nearly all the decline occurred in durable goods manufacturing. In April, large job losses occurred in motor vehicles and parts (-17,000) and in fabricated metal products (-11,000). Declines also occurred in furniture and related products (-4,000) and in semiconductors and electronic components (-3,000). Over the past 12 months, manufacturing employment has declined by 326,000.

Second, the average workweek, workday and overtime - all down:

In April, the average workweek for production and nonsupervisory workers on private nonfarm payrolls was down by 0.1 hour to 33.7 hours, seasonally adjusted. The manufacturing workweek declined by 0.3 hour to 40.9 hours, and factory overtime was down by 0.1 hour to 3.9 hours.

Third, part time work:

In April, the number of persons working part time for economic reasons increased by 306,000 to 5.2 million. This level was 849,000 higher than in April 2007. These individuals indicated that they were working part time because their hours had been cut back or because they were unable to find a full-time job.

Fourth, the Phantom Workers.

That's right phantom workers. Every month the BLS adds in jobs under its Birth/Death Model which is supposed to account for jobs created by new companies before those companies start getting picked up by government statistics. In theory this is fine....when the economy is growing. But this model has never been tested in a recession.

When we look at April's birth/death model results, we should be a little "surprised". Here's why.

a) Last year in April the Birth/Death model added 262,000 jobs. This year it added 267,000 jobs. Please BLS explain to me how when the economy is net losing jobs, and we are in the middle of a credit crunch, that it can be creating more new jobs in new companies than last year. NO WAY.

b) The Birth/Death model says that 45,000 new jobs were created by new firms in construction. Really! In a month where, on a seasonally adjusted basis, the economy LOST 60,000 construction jobs your model shows 45,000 jobs being added by new construction companies. Last April in the middle of the housing boom the model only showed adding 37,000 jobs. So this year with nobody building anything more jobs are added?On what planet?

c) Professional and Business Services. Here is the big one. The Birth/Death model shows a net +72,000 jobs added here (vs. only 48,000 last year). Interestingly the total net "add" from professional and business services (March over April, seasonally adjusted) was only 39,000. So all the existing businesses in this group "lost" 33,000 jobs, but we still has new ones coming in and "creating" 72,000 jobs.

Really? In the entire 5 year history of the Birth/Death model, throughout the entire economic recovery, the number of jobs added by professional and Business services has NEVER been as high as in April. I mean come on ... we have a contracting job market and you expect us to believe your model that more jobs were created in this field than in any month in the last 5 years. NO WAY!


I am strongly suspicious of this month's job numbers. They just do not add up, but if you read between the lines, the evidence is there that the labor market is much weaker than the headline numbers indicate.

Factor in the increase in part-time employment numbers and the overstated contribution of the Birth/Death model numbers and you see a jobs picture that continues to worsen.

Here is the kicker:

In April, average hourly earnings of production and nonsupervisory workers on private nonfarm payrolls edged up by 1 cent, or 0.1 percent, to $17.88, seasonally adjusted. This followed gains of 6 cents in February and in March. Average weekly earnings fell by 0.2 percent in April to $602.56.

That's right... with gas and food prices soaring the average weekly earnings actually went down last month. OUCH!

Cross-posted at



Welcome aboard!

Thanks for coming over and cross-posting.

Keep it up, it'll make your stuff easy to find. Plus, the more people we get over here posting, the more commenters will come over to look.


Welcome to EP!

And if you see any others writing in depth blogs on trade, economics, labor and so on, invite 'em on over.

We created this community site for the economics trade, policy wonks.

On your analysis, oh so true, the BLS spin is unbelievable.

I have one additional fact people do not realize, guest workers are counted in the BLS stats. So, take STEM occupational areas, it will come up with an incredibly low unemployment rate in spite of the aggregate number of jobs being down. BLS is counting those guest workers who are here temporarily, often to train and then take that job offshore. That's the H-1B Visa.