The media was giddy yesterday with news that 227,000 jobs were created in February. All Hail Obama!
The overall unemployment rate was unchanged at 8.3% as a result of as 476,000 more people who sought employment Good news for those who found jobs. Not so good news for someone who had one of the 6 million jobs that has not been regained since employment bottomed out in February 2010.
But what is happening beneath the surface as the economy continues to limp along? Here is an interesting insight from Anthony Mirhaydari at msn Money.
“…while jobs are jobs, the quality and the remuneration of those jobs are arguably more important. On this metric, the situation remains weak. Average hourly earnings were up 0.1% for the fourth month in a row. For the year, earnings were up 1.9% — continuing a trend of 1.8% to 2% growth seen over the past two years. According to Philippa Dunne of the Liscio Report, this suggests that low-wage jobs are playing a disproportionately large role.
Given that consumer price inflation has averaged 3.1% over the past year, even people who can find jobs are simply falling behind the rising cost of living. In fact, real disposable income has fallen in two of the past three months. This has never happened in a nonrecession environment before. “ (emphasis added)
To put it another way, even people who are working are following behind.
Another way to look at employment is by considering what proportion of the working age population is actually employed full-time. This gives us a good insight into how weak or strong the labor market is. And here is where the bleak picture unfortunately becomes very clear. The proportion of working age people who are employed full time is barely above the level of the 1982 recession. The current level is indicative of a recessionary level of unemployment and is not something the Obama administration should be patting itself on the back for.
Source: msn Money
One interesting way to interpret this chart is to look at what happened after the 1982 bottom and what is happening now. In 1982 the ratio bottomed and rapidly improved. Now, the ratio is limping along at a low level.
Want to know why? One need look no further than the two very different approaches taken by two very different Presidents. Reagan cut taxes, reduced regulation and promoted economic growth. Obama is doing the opposite and the results are the opposite.
Capitalism wins every time.