(What’s Left of) Our Economy: October Costs Manufacturing Some Jobs Momentum

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(What's Left of) Our Economy, automotive, CCP Virus, coronavirus, COVID 19, election 2020, Employment, fabricated metal products, food products, Jobs, Joe Biden, machinery, manufacturing, metals, motor vehicle parts, NFP, non-farm jobs, non-farm payrolls, private sector jobs, recession, regulation, tariffs, taxes, Trade, transportation equipment, Trump, Wuhan virus

The manufacturing jobs picture revealed in this morning’s October official U.S. jobs report was a classic glass-half-empty/half-full story. But for the first time since the employment rebound from its CCP Virus-induced lows, the gloomier view seems to have the edge – though a modest one. The main reason: In October, the rate of cumulative manufacturing job creation fell slightly behind that of the U.S. government’s entire employment universe (so-called non-farm payrolls, or NFP), and of the private sector.

Domestic industry increased its employment level on net by 38,000 in October on a sequential basis. That figure represented a decrease from the September total – which has been revised down from 66,000 to 60,000. But it’s an improvement over August’s also downwardly revised 30,000 total.

In addition, as opposed to dominating the manufacturing jobs picture for good and ill, as it has during the pandemic recovery period, automotive jobs, rose by a mere 1,400. The downward revision in combined vehicle and parts payrolls in September, however (from 14,300 to 7,700) did account for more than all of the total downward manufacturing revision for the month.

October’s manufacturing net jobs-creation leaders were fabricated metals products (7,200), food manufacturing (6,200), primary metals (6,000), and machinery (3,900). The first two categories enjoyed their second straight month of relatively strong job improvement, while the primary metals gain amounted to an important turnaround from September’s 3,400 net employment loss.

At the same time the October machinery results – important because that sector influences so much manufacturing activity overall, and because of its close connections to non-manufacturing industries like agriculture and construction) – were much less impressive than the 12,600 employment rise of September. Worse, this figure itself was downgraded from the initially reported 13,800.

The only significant October jobs loser in manufacturing was transportation equipment. This large category – which includes automotive – shed 2,400 jobs on net. The big problem here was motor vehicle parts, where employment fell by 2,800.

October’s employment progress means that manufacturing overall has regained 742,000 (54.44 percent) of the 1.363 million jobs it lost during the worst of the CCP Virus economic slump of March and April. (Those earlier job losses represented 10.61 percent of the last pre-virus – February – manufacturing employment level.)

As of October, non-farm payrolls total had regained 12.070 million (54.47 percent) of the 22.160 million total decrease they suffered in March and April. So although by this definition, overall U.S. employment plunged by 14.53 percent during the virus low point – more proportionately than manufacturing) — the rate of its jobs rebound is now slightly faster.

Faster still has been the bounceback in private sector jobs. Non-government employment (whose status is much more revealing of the economy’s fundamentals than government employment) fell by 21.191 million in March and April combined – greater relative losses (16.34 percent) than experienced either by manufacturing or the non-farm sector. But its strong October performance mean that it’s regained 12.317 million of these position on net – an increase of 58.12 percent.

But as if the CCP Virus and its decimation of the economy haven’t created enough uncertainties for manufacturing employment (and for the economy as a whole), this week’s Election 2020 results could further muddy the waters – especially if the White House changes hands. Despite October’s jobs slowdown, industry’s employment and output have held up well, due no doubt significantly to President Trump’s tariff-centric trade policies and domestic overhauls in taxes and regulations. The Trump manufacturing record pre-virus has also been strong. Would a Biden administration reversal of these moves put U.S. manufacturing back behind the eight-ball? Or would it find new alternative growth fuels for industry?

(What’s Left of) Our Economy: For Now, the U.S. Manufacturing Jobs Picture is Normalizing

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automotive, Employment, government workers, Jobs, manufacturing, non-farm employment, non-farm jobs, non-farm payrolls, private sector, public sector, stimulus package, {What's Left of) Our Economy

The total U.S. economy and employment pictures sure aren’t anywhere close to normal, but this morning’s official jobs report (for August) looked awfully familiar to anyone who’d been following payrolls in manufacturing before the CCP Virus struck. And the noteworthy result:  Industry continues to be a jobs outperformer during this pandemic period.     

In contrast to the enormous, and largely automotive-driven swings of previous months, U.S.-based manufacturers added 29,000 net new jobs last month compared with July’s levels. Automotive payrolls shrank by only 5,300.

Moreover, as with the overall non-farm economy (the U.S. government’s definition of the American employment universe), revisions to recent manufacturing results were slightly negative. July’s initially reported 26,000 manufacturing employment increase was revised up to 41,000, but June’s previous estimate of 357,000 (itself revised up) is now judged to have been just 333,000.

This time around, domestic industry’s biggest sequential employment winners in absolute terms were food products (up 12,100), plastics and rubber products (up 6,500), and fabricated metal products (up 5,900). The biggest losers were transportation equipment (whose 8,400 loss includes the 5,300 combined figures for vehicles and parts), non-metallic mineral products (down 4,400), and printing (down 4,100).

In all, from February (the last full month before virus-related shutdowns began dramatically depressing national economic activity) through its April bottom, manufacturing payrolls fell by 1.363 million, or 10.61 percent). Since then, industry has regained 643,000 (or 47.18 percent) of those positions. As a result, manufacturing employment is now 5.60 percent lower than in February, before the virus arrived.

Underscoring manufacturing’s relative resilience during the pandemic-induced recession, between February and April, the American private sector shed 21.191 million workers – a drop of 16.34 percent. Since then, 10.473 million net jobs have been restored (nearly half – 49.42 percent– of the total lost). As a result, private sector employment is now 8.26 percent below those pre-CCP Virus February levels.

In addition, from February through April, total non-farm employment sank by 22.34 million, or 14.64 percent. Since then, a net of 10.611 million (or 47.50 percent) of these jobs have come back, leaing non-farm payrolls 7.57 percent short of their pre-pandemic totals.

But since non-farm payrolls include public sector jobs, this performance will surely weaken if the Democratic-Republican standoff in Washington over economic stimulus stays unresolved for much longer, since one of the main bones of contention is federal aid for state and local governments whose tax revenues have been decimated by the virus and lockdowns.

Further, public sector jobs losses (and the service cuts sure to accompany them) inevitably will bleed into the private sector, as government is an important customer of what the private goods and service companies provide – both in terms of procurement, and in terms of how much government workers and their households consume.

Consequently, without a stimulus agreement, as unsatisfactory as this latest U.S. jobs report was, it might wind up being fondly remembered – including by manufacturers.

(What’s Left of) Our Economy: Picking Through the April Jobs Wreckage Details

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Employment, Great Depression, Great Recession, Jobs, Labor Department, manufacturing, NFP, non-farm jobs, non-farm payrolls, private sector, unemployment, {What's Left of) Our Economy

Today’s U.S. jobs report from the Labor Department (for April) is the first that makes fully (so far) clear the historic American employment disaster created by a combination of the CCP Virus and widespread economic shutdown and lockdown orders.

As widely observed already, the 14.9 percent national unemployment rate for the month is the highest suffered since the Great Depression of the 1930s. During this slump, (which, it can never be forgotten, helped pave the way for World War II), the annual jobless rate peaked in 1933 at 24.9 percent. Moreover, as always with these monthly jobs releases, the data only cover mid-month. So the May report will almost surely bring considerably worse new April revisions, just as the April report showed sharp downward revisions for March and even February.

Worse, as the Labor Department employment trackers observed, in April they were able to reach only about 70 percent of the number of households they tried contacting in their standard efforts to calculate that unemployment rate. They pre-virus response rate was 83 percent. And although it’s entirely possible that this weak response rate has overestimated unemployment, it could be producing an underestimate, too.

That big uncertainty aside, the revisions are a good place to start highlighting how the details of today’s numbers underscore what an unprecedented shock the economy is absorbing.

Principally, that March total plunge in non-farm payrolls (NFP, the Labor Department’s U.S. jobs universe) was first reported at 701,000 – a figure that was (sadly) exceeded four times during the Great Recession that followed the 2008-09 financial crisis. Now these March losses are pegged at 870,000 – much higher than the Great Recession peak of 784,000 in January, 2009. April, of course, has blown away such comparisons, as NFP plummeted by 20.50 million. Indeed, that’s the largest monthly decrease in absolute terms in the history of these Labor Department data, which go back to 1939.

As a result, U.S. employment levels are back to where they were in February, 2011 – meaning that more than nine years of jobs gains have just gone up in smoke.

In fact, those 20.500 million net jobs destroyed in April alone (again, this is a preliminary number, which will be re-estimated twice more in the next two months, and then again when Labor issues the next of its standard multi-year revisions) represent more than twice as much employment loss as that experienced during the entire Great Recession (whose jobs dimension lasted from December, 2007 until March, 2010) – 8.698 million.

As for the private sector, the initially reported March jobs collapse of 713,000 was topped five times during the Great Recession. But this morning’s new March jobs wipeout figure of 812,000 now matches that recession’s worst (hit in April, 2009). Tragically, the new April private sector job loss figure of 19.520 million makes even those dreadful numbers look positively quaint.

Oddly, even though its April monthly job loss was 1.33 million, manufacturing has continued to hold up relatively well so far during the CCP Virus crisis. Industry’s March payroll decline was revised down from 18,000 to 34,000. And the April figure was much worse than manufacturing’s worst month during the Great Recession (289,000, recorded for January, 2009). Moreover, the 1.330 million April manufacturing employment nosedive was more than half of the total manufacturing job decrease during the entire Great Recession (2.293 million).

All the same, since February, whereas total U.S. job totals are off by 14.02 percent since February, and private sector employment has fallen by 15.70 percent, manufacturing’s drop has been 11.87 percent.

Once more, this relatively bright picture could change either with next month’s NFP report, or relatively quickly thereafter, as the economy reopens. But it’s also important to keep in mind that the pre-Great Recession total U.S. employment peak of 138.392 million in December, 2007 wasn’t matched again until May, 2014. It took until March, 2014 for the private sector to regain its pre-recession employment peak of 116.060 million. And manufacturing has never regained its pre-recession level of 13.746 million – which itself was far from a peak, because its payrolls had been decreasing for decades. The best it did was to regain 1.413 million (61.62 percent) of the 2.293 million jobs lost during the Great Recession. This level was hit just last December.

And all these recoveries were reasonably “V-shaped” (that is rapid), by historical standards. Unfortunately, “V” seems to be a letter going out of style as economists struggle to figure out what the post-CCP Virus recovery will look like.

(What’s Left of) Our Economy: A Great Recession-Like Jobs Report

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BLS, Bureau of Labor Statistics, CCP Virus, Employment, Great Recession, Jobs, manufacturing, nonfarm jobs, private sector, {What's Left of) Our Economy

Since this U.S. economic nosedive is, as the Monty Python crew liked to say, “completely different,” this post will depart from its usual format, too – by trying to provide some perspective on today’s horrendous (March) employment report from the Bureau of Labor Statistics (BLS). Unfortunately, this perspective isn’t terribly comforting. 

First, three reminders:

>The insanely astronomical number of jobless claims applications filed in the last two weeks make clear that at least in the near future, the employment situation will become much worse. Specifically, these claims numbers have totaled some 10 million in the last two weeks alone. That’s 7.75 percent of the entire private sector workforce as of the March figures.

>Similarly, as with all the monthly U.S. jobs reports, the March number described the situation only as of mid-month. Most of the economy and broader American CCP Virus-related shutdown measures were mandated or suggested afterwards.

>And in this vein, this morning’s March data were only preliminary. They’ll be revised twice more in the next two months, and then the full-year 2020 results will be revised. Indeed, the job creation figures for January and February (which were still decidedly strong) were downgraded by 57,000 in all.

Having cleared away that brush, it’s still interesting to note that, however terrible the new numbers are – and however terrible-er they’re bound to get – so far the March jobs meltdown hasn’t been as bad as the monthly nosedives suffered during the Great Recession. But it’s already way too close for comfort.

Whereas total nonfarm jobs (the BLS’ U.S. jobs universe) fell on month in March by 701,000, during the previous decade’s punishing downturn, that figure was topped no less than four times, and peaked at 784,000 in January, 2009.

Moreover, no sequential employment growth returned till that November, and it hit just 12,000. Worse, the very next month, payrolls sank by 269,000. The bottom was finally hit in February, and jobs growth recovered slowly afterwards, in fits and starts. Year-on-year employment gains didn’t reemerge until September.

As for private sector jobs, last month’s 713,000 collapse was exceeded during the Great Recession five times, with the worst results coming in April, 2009 (when 812,000 jobs were wiped out).

Private sector employment bottomed in February, 2010, too, and also rebounded sluggishly unevenly, with year-on-year gains coming only in August.

All told, 8.698 million jobs were lost from the onset of the Great Recession (December, 2007) to that February, 2010 trough. For the private sector, the losses totaled 8.794 million. Both figures are alarmingly close to the sum of the last two weeks’ jobless claims.

Interestingly, manufacturing jobs fell by only 18,000 sequentially in March. And on a yearly basis, they’re actually up by 12,000.

But since so many customers for American manufacturers are the workers who are being sidelined, and their former employers who are closing their doors or scaling their operations way back, these numbers, too, are bound to skyrocket.

Will a recovery in manufacturing and overall employment come even as quickly as after the Great Recession (which, again, wasn’t so quick)? Because this slump really is so “completely different” due to its biological origins, that’s the $64,000 Question. Given that a virus second wave is distinctly possible before vaccines or cures are ready, and given that normality as a result is only likely to return slowly to any business or consumer activity that requires close person-to-person proximity, there’s room for plenty of doubt.

 

(What’s Left of) Our Economy: How Big a China Virus Hit?

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China virus, coronavirus, COVID 19, Economic Policy Institute, Employment, employment multiplier, Jobs, output, output multiplier, production, {What's Left of) Our Economy

The short answer to the headline’s question? “Really big.” Which is kind of obvious. So today I thought I’d present some information on techniques economists use to come up with a somewhat more specific idea.

First let’s look at jobs – because jobs obviously affect people and their ability to provide for themselves. Economists taking a “put people first” approach would start by looking at the official federal government data on how many Americans are employed by those parts of the economy that clearly will be most seriously affected. Those numbers look like this as of last month’s preliminary figures, in millions of employees:

retail trade:                                                            15.659           1.22

educational services:                                               3.838           1.94

  (includes public & private institutions)

leisure & hospitality:                                            16.873

arts, entertainment, & recreation:                           2.494          3.79

  performing arts & spectator sports:                     0.516

  spectator sports*:                                                 0.146

accommodation & food services:                        14.379          1.61

  accommodation:                                                  2.092

  restaurants & other eating places:                     11.103

*January figure

The indented categories are industries of special interest that are sub-sectors of the larger categories below which they appear. And if you add up the major categories, you come up with 54.193 million workers – nearly 42 percent of the total U.S. private sector workforce.

Sharp-eyed readers will notice a number to the right of the worker figures – that number shows what’s called the employment multiplier for the sector in question. Simply put, it means how many jobs in other parts of the economy the maintenance, creation, or loss of a single job in the first sector affects. In other words, every job in American retail companies and stores affects 1.22 jobs elsewhere (e.g., from suppliers that furnish that industry with the inputs it needs to function, and from the purchases its own workers make from other industries).

Employment multipliers aren’t easy to find – these come from a Washington, D.C. think tank called the Economic Policy Institute, and don’t cover all the initially affected sectors. But from these data alone, it’s obvious that the total number of U.S. jobs that could be lost, or see a cutback in hours, is much greater than the employment damage done, for example, by the simple closing of a single restaurant or sports stadium.

Most economists would also look at how much output the most seriously affected industries contribute to the gross domestic product (GDP – the total sum of all the goods and services Americans turn out during a given time period). GDP and output matter, of course, because if businesses aren’t producing goods and services, they won’t need employees. Here how they look, according to a measure called “value-added” – which seeks to eliminate various forms of double-counting that result when trying to gauge production in sectors that make final products, and sectors that make their parts, components, materials, ingredients, and other inputs. Also important – these figures are not adjusted for inflation.

Percent of total U.S. value-added

retail trade:                                                            5.50           0.66

healthcare services & social assistance:               7.60

educational services:                                            1.20           0.72

performance arts, spectator sports, museums &

  related activities:                                               0.70            0.81

accommodation & food services:                       3.10

  accommodation:                                               0.80

  food services:                                                   2.30

Again, the sub-categories are indented. Here the total percent figure is much smaller than the employment figure. But at 21.20 percent, it’s not bupkis, either.

And as with employment, don’t forget those multipliers (also presented to the right)! Here, the readily available data is scantier, and those I use are from 2012. But clearly the indirect output (and growth) impact will be non-trivial. (These output multipliers come from the Manufacturing Institute of the National Association of Manufacturers.)

Even if the China Virus situation wasn’t still evolving – and possibly dramatically, no one should take these numbers to the bank. Especially important is remembering that none of them take into account the danger that all these jobs and output and income and related business revenue losses bring about the kind of financial system seize-up seen during the financial crisis of 2007-2008. Moreover, although business and entire industry shutdowns will be extensive in the above and other sectors, they won’t be total, or (usually) anywhere close. And the damage will not last forever, or anywhere close.

All the same, we’re talking major drops in employment, incomes, and production – which is exactly why the economic response from Washington needs to focus on getting and guaranteeing money and credit where it’s needed pronto.

(What’s Left of) Our Economy): The Real Private Sector’s Job Creation is Lagging Again

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Employment, healthcare services, Jobs, private sector, real private sector, subsidized private sector, Trump, {What's Left of) Our Economy

Although President Trump may not like America’s current healthcare system much, lately it’s been keeping his own economic record in solid shape – not to mention and bolstering his reelection chances. The evidence? Robust employment creation in the nation’s enormous healthcare services sector this year has been almost singlehandedly responsible for keeping job growth in the respectable range, and for strengthening the case that he’s steered the economy ably.

Unfortunately, the big 2019 relative rebound in payrolls in healthcare services and the rest of what I’ve long called the subsidized private sector is less good news for the economy itself. For the huge scale of these positions says much more about the government largesse on which their existence depends than about the state of the nation’s economic fundamentals – the market forces that drive employment in what can be called the economy’s real private sector, and that are supposed to be the keys to long-term national prosperity.

In fact, the figures for 2019 – which now cover its first eleven months – show that whereas the subsidized private sector’s profile in the U.S. labor market had been receding during the first two years of the Trump administration, this year it returned to levels not seen since the early days of the current (record-length) economic recovery. And consequently, the real private sector’s performance has revealed new weakness.

Specifically, from January-through-November 2011 (when the economy settled into normal expansion mode after the typically strong short-term bounceback from an unusually deep recession) through the comparable 2016 period, the subsidized private sector’s share of total gains in “nonfarm employment” (the U.S. Labor Department’s definition of the American jobs universe) grew from 19.35 percent to 25.87 percent. And its share of employment increases in the total, conventionally defined private sector itself, increased from 16.71 percent in 2011 to 36.88 percent in 2016.

By Mr. Trump’s second year in office, healthcare services and other subsidized private sector employment had sunk to 18.96 percent of total nonfarm job creation and 24.55 percent of total private sector job creation.

But what a difference a year has made! For the first eleven months of 2019, fully 30.96 percent of all U.S. jobs created have come in the subsidized private sector, and these industries accounted for more than half (50.75 percent) of private sector job creation. The former figure was the economy’s highest since 2010 (when it hit 32.78 percent), and the latter’s the highest since 2016 (when it hit 58.43 percent).

The Trump record isn’t entirely discouraging if you’re a fan of real private sector job creation – and you should be if you believe (as you should) that the predominance of market forces represents the economy’s best hope for sustainable prosperity. For the pace of public sector hiring has definitely waned over the last three years – and not only in relative terms. During the final three January-through-November periods of the Obama administration, government was adding an annual average of 140,000 jobs. During the first three such periods under Mr. Trump, the annual average is down to 110,000 (though it’s been on the upswing since 2017).

Yet if levels of government spending are the driving forces in both cases, is the relationship between the public sector and the subsidized private sector a distinction without a difference?

(What’s Left of) Our Economy: U.S. Job Quality Takes a Turn for the Worse

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Employment, healthcare services, Jobs, private sector, public sector, recovery, subsidized private sector, {What's Left of) Our Economy

Here’s how bad America’s employment performance has been so far this year. Not only has job creation lagged quantitatively. But by one key measure that RealityChek has followed for years, job quality worsened, too. Specifically, after falling significantly during the first two years of the Trump administration as a share of total hiring, job creation in what I call the subsidized private sector of the economy is up sharply.

To review, the subsidized private sector – dominated by healthcare services – consists of those industries that are typically classified (including by federal government statisticians) as private sector industries, but whose levels of activity (including job creation) are determined largely by politicians’ decisions about levels of government support, not market forces.

This observation doesn’t imply any conclusion that subsidized private sector jobs are merit-less. But it does reflect the understandable and commonly held belief that the genuine private sector is the economy’s main source of productivity growth and innovation, and that therefore it should dominate job creation as well.

The main evidence comes in the form of the figures on the subsidized private sector’s share of total hiring in America, of hiring in the private sector as conventionally defined (which includes the subsidized numbers), and of hiring in the “real private sector” (the total resulting from subtracting the subsidized private sector from the conventionally defined private sector figures). And since we only have data for the first six months of this year (including those for June, which are still preliminary), the time frames compared here will consist of the first six months of each year since the June, 2009 beginning of the current economic recovery).

During the first six months on Mr. Trump’s watch, net new subsidized private sector job creation accounted for 22.29 percent of total job creation (“non-farm” hiring, as the Bureau of Labor Statistics – BLS – defines it), for 23.41 percent of such hiring in the conventionally defined private sector, and of 30.57 percent of the net new jobs in the “real private sector.”

During the first six months of 2018, these shares all declined – to 18.85 percent, 19.75 percent, and 24.61 percent, respectively. At least as important, they were among the lowest recorded during the current recovery. In particular, they were all lower than they were during the first six months of President Obama’s last year in office – when they reached 28.57 percent, 31.57 percent, and 46.13 percent. That is, from January through June of 2016, the increase in subsidized private sector payrolls was nearly half as large as all net new hiring in the rest of the private sector (the “real private sector”) – which is much larger.

But during the first six months of this year, the subsidized private sector made a tremendous comeback.

These industries’ share of total net new U.S. hiring jumped from 18.85 percent to 30.88 percent. Its share of conventionally defined private sector hiring rose from 19.75 percent to 33.06 percent. And net payroll increases in the subsidized private sector compared with “real private sector” payroll increases more than doubled – from 24.61 percent to 49.38 percent.

Even worse, all three results were the highest registered during the current recovery.

The only (mildly encouraging) news on the job quality front in this respect (accepting my assumption that relatively weak job creation in the “real private sector” is a troubling development): On a standstill basis (representing a snapshot, not measuring rate of change), the combined share of total hiring accounted for by the subsidized private sector and the public sector keeps falling. But that’s clearly because job creation in the public sector proper remains weak.

At the onset of the last recession – at the end of 2007 – these jobs amounted to 29.84 percent of all U.S. jobs tracked by the BLS. When the recovery began, this figure had increased to 32.20 percent. By last June, it has dipped to 30.94 percent. And as of this past June (again, preliminarily), it was down to 30.87 percent. That’s still higher than when the last recession began, so it’s possible to argue that the American labor market still hasn’t fully normalized. If the subsidized private sector’s recent job creation resurgence isn’t interrupted, such normalization will become an ever more distant goal.

(What’s Left of) Our Economy: Private Sector U.S. Jobs Increasingly Really Deserve the Name

Tags

Barack Obama, Employment, healthcare, Jobs, private sector jobs, recession, recovery, subsidized private sector, Trump, {What's Left of) Our Economy

Although unemployment in America has hovered near multi-decade lows for most of the last year, concerns about job quality rightly persist – largely because wage gains have only recently showed signs of recovering to historically normal levels for a recovery. But the latest official data from the Labor Department demonstrate that the makeup of the country’s employment picture and how it’s changed make clear continued improvement in one key measure: Growing private sector employment increasingly reflects gains in what I’ve called the real private sector, as opposed to the subsidized private sector.

Also apparent from the employment figures: The resurgence of the real private sector in relative terms as well as in absolute terms has been a Trump era phenomenon.

As known by RealityChek regulars, this trend is encouraging because the subsidized private sector consists of parts of the economy that are often (and even officially) viewed as parts of the private sector, but whose health depends largely on government largesse. That is, its total employment and its employment gains would be much smaller without huge government payouts – i.e., politicians’ decisions. The healthcare services industry is the main example.

By contrast, the real private sector consists of parts of the economy whose health flows largely from free market forces. So without getting involved in the debate over whether the United States supports too many subsidized private sector jobs or not, it should be clear that they have little to do with the state and health of the economy as a whole – unlike real private sector jobs.

According to the Labor Department’s Bureau of Labor Statistics, from 2013 through 2016, the subsidized private sector’s share of total annual employment increases more than doubled: from 11.34 percent to 25.99 percent. And its share of annual total private sector jobs gains (that is, employment increases by the private sector as conventionally defined), soared from 11.02 percent to 28.59 percent.

During 2017 and 2018 (and the data for late 2018 is still preliminary), the subsidized private sector’s share of total annual U.S. jobs gains dropped to 21.04 percent and then to 19.90 percent. And its share of the growth of total private sector jobs fell to 21.91 percent and then to 20.74 percent.

Another way to look at the Obama-era growth of subsidized private sector employment is to examine its growth as a share of the growth of real private sector jobs. In 2013, this figure stood at 12.38 percent. In 2016? Just over 40 percent. In other words, in the last year of Barack Obama’s presidency, some four in ten of the net new jobs created in the private sector came in the subsidized private sector – meaning that they were heavily dependent on government largesse.

In 2017 and 2018, subsidized private sector jobs growth as a share of total private sector jobs growth sank all the way to 28.05 percent, and then to 26.16 percent.

Looking at the economy from a static standpoint – i.e., through snapshots taken at crucial dates – illustrates these trends, too, although less dramatically. After all, even major relative changes can take many years to show up as major absolute changes in a supertanker as big as the U.S. economy.

At the outset of the last recession the subsidized private sector represented 13.67 percent of all U.S. jobs and the real private sector’s share was 70.16 percent. And the subsidized private sector’s share of the total (conventionally defined) private sector was 19.49 percent.

By the time the recovery began, in mid-2009, these figures stood at 14.97 percent and 67.80 percent – showing that during an economic downturn that decimated the overall American jobs market, subsidized private sector employment rose not only in relative terms but in absolute terms (from 18.92 million to 19.61 million. Meanwhile, the subsidized private sector’s share of the total private sector employment had risen to 22.07 percent.

By January, 2017 – the final month of the Obama administration and eight and a half years into the recovery – the subsidized private sector comprised 15.75 percent of all American jobs, and the real private sector was back up to 68.94 percent. Subsidized private sector employment had grown to 22.84 percent of total private sector jobs.

By December, 2018 (results that are still preliminary) the subsidized private sector’s share of all American employment had kept increasing – to 15.91 percent. And the real private sector’s share grew modestly, too – to 69.11 percent, as did the subsidized private sector’s share of the total private sector (to 23.02 percent).

Nevertheless, this examination of the changing dimensions of subsidized private sector employment also reveals that the national jobs market still hasn’t returned to pre-recession normality. In particular, even though the current recovery is nearing it’s tenth anniversary, that real private sector share of total employment (69.11 percent) is still below where it stood at the downturn’s onset (70.16 percent).

(What’s Left of) Our Economy: Manufacturing Job Creation Softened a Bit in May; Wages (Literally) Went Nowhere

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Employment, inflation-adjusted wages, Jobs, manufacturing, non-farm jobs, private sector, recession, recovery, wages, {What's Left of) Our Economy

I was on some travel yesterday and couldn’t put out my usual same-day, post. But here’s my analysis of the latest monthly (May) manufacturing figures contained in that morning’s employment report from the Bureau of Labor Statistics:

>U.S. manufacturing job creation shifted into a somewhat lower gear in May, with its 18,000 sequential gain the smallest such improvement since last September’s 6,000. Revisions left the last February through April monthly totals unchanged on net.

>Worse news, moreover, came on the manufacturing wages front. Pre-inflation hourly pay flat-lined on month in May – its worst such results since last November’s similar performance. In addition, April’s previously reported 0.15 percent monthly manufacturing constant dollar wage gain was revised down to 0.15 percent.

>By contrast, overall current dollar private sector wages saw their best monthly improvement (0.30 percent) since December’s 0.38 percent.

>As a result, May’s year-on-year manufacturing wage improvement before inflation totaled only 1.85 percent. Between the previous Mays, pre-inflation manufacturing wages advanced by 2.12 percent.

>These increases also lagged those for the overall private sector, where current dollar wages rose by 2.71 percent on year in May. That was the best such performance since January’s 2.77 percent. And it exceeded the 2.46 percent private sector wage gain between May, 2016 and May, 2017.

>Consequently, the wage gap between manufacturing and the overall private sector widened significantly between last May and this. As of last May, during the current economic recovery, pre-inflation private sector wages had increased 21.24 percent faster than manufacturing wages. This May, the difference was up to 28.13 percent.

>Despite May’s somewhat weaker manufacturing employment growth, the sector’s share of total non-farm employment (the Bureau of Labor Statistics’ U.S. jobs universe) remained at just under 8.53 percent. Last May, manufacturing accounted for just under 8.49 percent of total non-farm employment, meaning that during the last year, manufacturing payrolls have grown slightly faster than American payrolls in general.

>In fact, manufacturing’s May year-on-year job creation (259,000) was a tremendous improvement from the figure between the previous Mays (78,000) and the best annual gain since May, 1998’s 262,000.

>Over the longer-term, however, manufacturing remains a significant job-creation laggard. Since it’s latest employment bottom, in February and March, 2010, it’s regained 1.22 million (53.21 percent) of the 2.293 million jobs lost during the recession and its immediate aftermath.

>The overall private sector lost 8.780 million jobs from the year-end 2007 onset of the recession through February, 2010. Since then, it’s created 19.086 million net new jobs.

>Moreover, since the recession’s onset, the private sector has boosted its employment by 8.88 percent. But manufacturing payrolls are still down 7.81 percent from their December, 2007 levels.

>Manufacturing has been an even worse real wage laggard. The latest inflation-adjusted data go through April, and show that manufacturing couldn’t even match the monthly flat-line in private sector wages. In manufacturing, pay between March and April dipped by 0.09 percent.

>Year-on-year, private sector after-inflation wages inched up only 0.19 percent in April, but even that negligible growth handily beat manufacturing’s 1.10 percent decline. Between the previous April’s inflation-adjusted manufacturing wages improved by 0.55 percent.

>Indeed, both the private sector and manufacturing continue to experience technical real wage recessions (periods of cumulative shrinkage lasting at least two quarters). But in the private sector, such pay is off only 0.09 percent since last May. In manufacturing, real wages are down by this amount since January, 2016.

>And whereas private sector wages are up 4.17 percent in real terms during the current economic recovery (which is nearly nine years old), their manufacturing counterpart gained only 0.37 percent – less than a tenth as much.

(What’s Left of) Our Economy: Strong Manufacturing Jobs Numbers Still Aren’t Moving the Wages Needle

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automotive, Bureau of Labor Statistics, Employment, Great Recession, inflation-adjusted wages, Jobs, manufacturing, non-farm jobs, private sector, recovery, wages, {What's Left of) Our Economy

February’s jobs report showed a continuation of strong employment numbers and weak wage performance in manufacturing. The latest 31,000 monthly jobs gain kept up a streak of strong sequential jobs increases that began in July. Manufacturing’s 224,000 year-on-year payrolls increase was its best such improvement since May, 1998’s 262,000. Revisions boosted the sector’s employment by 28,000 for December and January. Manufacturing has now regained 50.63 percent of the net jobs it lost during the Great Recession, and it since last February, has raised its share of overall U.S. employment from 8.49 percent to 8.51 percent. The automotive sector, moreover, ended a technical jobs recession that had begun in April, 2016.

Yet current dollar wages flat-lined sequentially in February for manufacturing, while they grew by 0.15 percent for the overall private sector. And the yearly manufacturing wage advance of 1.67 percent was the slowest since July, 2015’s 1.49 percent. Further, in real terms, both manufacturing wages and private sector wages are in technical recession, with the former down on net since January, 2016 and the latter since last May.

Here’s my analysis of the latest monthly (February) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>February’s strong monthly employment gains and major upward revisions combined to bolster considerably manufacturing’s recent jobs performance.

>Industry’s payrolls grew by 31,000 sequentially in February, while its January jobs increase was revised up from 15,000 to 25,000, and December’s from 21,000 to 39,000.

>Largely as a result, manufacturing payrolls jumped by 224,000 on an annual basis – the best such performance since May, 1998’s 262,000.

>Between the previous Februarys, manufacturing jobs grew by just 23,000.

>Moreover, the year-on-year figures mean that manufacturing employment has been growing faster than employment in the economy’s non-farm sector (the Bureau of Labor Statistics’ American employment universe).

>Last February, manufacturing accounted for 8.49 percent of total non-farm payrolls. This February, its share stood at 8.51 percent.

>Manufacturing has now regained more than half (50.63 percent) of the 2.293 million jobs it lost since the late-2007 onset of the Great Recession through the sector’s employment bottom in February and March, 2010.

>In addition, the automotive sector – which led domestic manufacturing’s early recovery rebound from the Great Recession – ended its employment recession in February.

>A 6,200 monthly jobs gain in February plus upward January revisions helped the motor vehicles and parts industries out of a period of net employment decline that had begun in April, 2016.

>Yet manufacturing’s sterling employment performance contrasts strikingly with its still-dismal wage performance.

>Whereas overall private sector wages rose 0.15 percent sequentially in February, manufacturing wages recorded no change.

>Industry’s wage revisions were mixed, with January’s 0.11 percent growth now judged to be 0.22 percent, December’s 0.11 percent advance now pegged at 0.19 percent, but November’s 0.15 percent gain revised to zero.

>The year-on-year manufacturing wage picture is no better. Since last February, industry’s pre-inflation hourly pay is up just 1.67 percent – the slowest such rate since July, 2015’s 1.49 percent.

>Worse, between the previous Februarys, manufacturing wages grew a much faster 2.88 percent.

>Current dollar private sector wages have risen 2.61 percent on an annual basis.

>As a result, since the start of the current economic recovery, in mid-2009, pre-inflation private sector wages are up 25.80 percent more than manufacturing wages. A year ago, the gap was only 21.32 percent.

>Manufacturing’s real wage record lately has been even dimmer in absolute and relative terms.

>The latest data go through January, but that month, inflation-adjusted pay in industry fell 0.37 percent sequentially – a bigger drop than that for the overall private sector (0.28 percent).

>Year-on-year, real wages are up 0.66 percent in the private sector in toto versus a 0.29 percent dip for manufacturing.

>And worse still, although both the private sector and manufacturing are suffering real wage recession, the former’s began only last May – with after-inflation hourly pay down 0.28 percent since then.

>For manufacturing, such pay is down 0.09 percent since January, 2016.

>Further, since the current recovery’s mid-2009 onset, overall real private sector wages have risen more than ten times faster (3.98 percent) than manufacturing wages (0.38 percent).

>Over the longer term, moreover, manufacturing remains a significant jobs laggard. Whereas industry has now regained more than half the jobs it lost during the recession and its aftermath, the overall private sector has more than doubled its recessionary job losses. Since shedding 8.780 million positions on net from December, 2007 through February, 2010, it has created 18.569 million.

>In addition, manufacturing employment is still 8.24 percent below its pre-recession peak of 13.746 million jobs, overall private sector employment has risen 8.43 percent during that period.