Summary: Another jobs report, more clickbait headlines about the monthly noise. Here’s a look beneath the glitz to the important news. The US economy continues slow steady growth, with continued signs of slowing. Also, 47% of new jobs went to foreign-born workers during the past year. Important matters. Too bad neither the candidates, journalists, or Americans care about such things. On to the next astounding soundbite!
Contents
- The noise: monthly changes in jobs.
- The important news about the trend in number of jobs.
- A clearer trend: total number of hours worked.
- Where were the new jobs?
- What about the info sector jobs machine? Let’s all become programmers!
- A red flag: growth in temp workers has slowed to almost zero.
- It’s not a “Starbucks Economy”. See the slow but steady wage growth.
- Explosive news: 47% of new jobs went to foreign-born workers.
- Conclusions and For More Information
Here are the monthly numbers that generate the exciting headlines!
It’s noise. The trends are almost impossible to clearly see.
Graph of the monthly change in jobs since Jan 2013 (SA).
Here is a more useful graph. Employment is still growing, but slowing.
Do you see why the monthly outpourings of joy or despair during the past 4 years?
The real story is the stability of the slow growth in the US economy.
Graph of the year-over-year percentage growth in jobs (not seasonally adjusted).
Here is an even more useful graph: total hours worked in the private sector.
Total jobs combines full-time and part-time, as if they’re the same.
This more clearly shows the slowing during the past year.
Where were the new jobs in July? Same as usual.
Professional & biz services, education & health care, leisure & hospitality.
Graph of the change in jobs during July by sector (SA).
What about the information sector, our 21st century jobs machine?
We tell youth: “Go to the info sector!”
Reality: only slow growth. Total growth over 5 years: 4.0%.
Graph of year-over-year percent job growth in the info sector (SA).
Temporary workers are the first to get fired, and so are a leading indicator.
The number of temp workers fell 6-12 months before the past 2 recessions.
(Total employment is a lagging indicator.)
The slowing of temp growth this year gives a warning.
Graph of monthly change in temporary help services jobs (NSA).
The US is not a “Starbucks Economy”.
Wage growth is typical of past cycles: slow then accelerating (NSA).
But it seldom grows fast, or for long. That’s for profits, not wages.
Who is getting the jobs?
Employment of foreign-born workers grows faster than natives.
Of the 2,715 new jobs created in the past year, 47% went to foreign-born workers.
Growth in workers by place of birth (NSA): index with June 2009 = 100.
Conclusions
The US economy continues to grow slowly, but almost every metric shows that the rate of growth is slowing. While we cannot yet see the next recession, the data suggests that we should begin to prepare — perhaps it will arrive in early 2017. Raising interest rates now would be quite mad.
Much of what you read about jobs is malarkey. The real story is untold because it is boring (not useful clickbait): The miracle of growth in the US economy (spoiler: its slow but steady). The really astonishing news: neither candidate has much to say about a US economy stuck in “slow” (other than vague promises to kiss it and make it better).
For More Information
If you liked this post, like us on Facebook and follow us on Twitter. See all posts about economic growth, about secular stagnation, about American politics, about Campaign 2016, about forecasts, and especially…
- Why America’s growth is slowing, and a solution — Imagine bringing June Cleaver from her 1957 home to today’s equivalent; she’d be astonished at our lack of progress. See how we’ve underperformed futurist Herman Kahn’s 1967 expectations for the year 2000.
- Larry Summers gives us the bad news. Worse, the only solution is more of the same.
- Do we face secular stagnation or a new industrial revolution?
- The IMF warns us of economic stagnation & suggests fixes. We should listen.
- Ben Bernanke sees the great slowdown in technological progress.
- Poorly prepared Boomers retiring means hard times for them and for America.
- The Fed sees years of slowing growth. Prepare for years of political turmoil.
- As boomers retire they create a drag on US GDP that will last for decades.
The latest and best book about this
The essential reading to understand this aspect of modern America — shaping our future while we sleep — is The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War
“In the century after the Civil War, an economic revolution improved the American standard of living in ways previously unimaginable. Electric lighting, indoor plumbing, home appliances, motor vehicles, air travel, air conditioning, and television transformed households and workplaces. With medical advances, life expectancy between 1870 and 1970 grew from forty-five to seventy-two years. Weaving together a vivid narrative, historical anecdotes, and economic analysis, The Rise and Fall of American Growth provides an in-depth account of this momentous era. But has that era of unprecedented growth come to an end?
“Gordon challenges the view that economic growth can or will continue unabated, and he demonstrates that the life-altering scale of innovations between 1870 and 1970 can’t be repeated. He contends that the nation’s productivity growth, which has already slowed to a crawl, will be further held back by the vexing headwinds of rising inequality, stagnating education, an aging population, and the rising debt of college students and the federal government. Gordon warns that the younger generation may be the first in American history that fails to exceed their parents’ standard of living, and that rather than depend on the great advances of the past, we must find new solutions to overcome the challenges facing us.
“A critical voice in the debates over economic stagnation, The Rise and Fall of American Growth is at once a tribute to a century of radical change and a harbinger of tougher times to come.”
“Employment of foreign-born workers grows faster than natives”
I wonder if that’s less unnatural than might seem at first glance. The following is super crude, on-the-spot, and without too much consideration. [disclosure – I immigrated as a child. this is an interesting subject.]
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immigrants, all ages, per year, now =~ +1M fairly steady since 1990s [1]
of which maybe 75% are working age? =~ +0.75M [2]
entering work age =~ population age 20 =~ +4.5M or so [3]
leaving work age =~ population age 65 =~ -3.6M or so [3]
change in working age population = difference of above =~ +0.9M
of which difference less than 100% are native born, since age 20 population has more immigrants than age 65 (immigration) [1 again, as immigration pocked up in 90’s]
Obviously there’s a lot more to it, but I think for the most part, the 47% statistic could result from immigrants getting jobs at a rate similar to native born.
*** Of course maybe you are saying the immigrant flow consumes much of the new jobs that are available, which is very true. Also probably with negative effect on wages. ***
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[1] https://www.dhs.gov/sites/default/files/publications/ois_yb_2014.pdf
[2] http://www.migrationpolicy.org/programs/data-hub/charts/age-profile-immigrants-over-time
[3] search for “population pyramid 2015” or similar, divide figures by # of years in each bucket
typo: pocked up = picked up
Pete,
(1) The number of immigrants has been running at almost 1.5 million per year, not one million (excluding the drop around the Great Recession). See Census data here. I don’t know what their age distribution is. It might include many children and non-working spouses (not on-the-books working).
(2) The BLS defines working age as 16-65. From 2007-2014 the number increased 1,050 thousand per year (not 900 thousand). I don’t know if this includes illegals, or if so how accurately they count them.
(3) Calculating jobs for illegals is complex. I doubt they respond to the household report survey. Comparing the BLS jobs numbers with their population from the census doesn’t work either, as many work off the books.
(4) Boomers are not retiring at 65. No surprise, given their low level of savings. Social security pays full retirement benefits for people retiring now (born 1943-1954) at 66, and many delay beyond that (Social security pays little, and many employers have health insurance better than Medicare).
(5) Your calculation would be interesting to see if accurately run. Drawing conclusions with uncertain numbers doesn’t help.
(5) Yes, it’s just a hasty sketch, I wanted to show where I thought it was going. I was surprised by the 47% figure, suspected it could be a rough balance of native-born worker demographics vs immigrants, and took a tiny bit of time to get a first look at that.
(1) I was using the DHS figures for green cards (permanent residents) issued. DHS does provide some age data too. I was looking at table 1 and table 8 (pdf file pages 10 and 30) in the pdf from dhs.gov above.
Green cards do not include temporary work visas (such as H1B), a big number — those who stay will transform into permanent residents and get accounted for that way. Table 25 (page 68-71) for this data. I was surprised by the big increase in “temporary workers and trainees” after 2010. The “NAFTA professional workers” category in particular ballooned… had no idea about this. Like H1B but renewable indefinitely.
(2) 1.05M then, thank you. I was reading off a population pyramid graph. But that increase is surely not all native born.
(3) I figured none of this includes illegals
(4) Yes, a very important point!
Nice analysis, as usual, FM. The one generally positive thing about the jobs report that has been under-reported is that more people keep getting lured back into the workforce. It is a slow trickle compared to the number that fell out of the workforce in the 2008-11 time frame but it is better than nothing.
One thing confused me, “Of the 2,715 new jobs created in the past year.” At a guess, you mean 2.715 million new jobs created in the past year?
The fact that companies keep hiring in spite of generally falling profits and productivity has me curious. Any idea as to why they would do this?
Pluto,
“it is better than nothing.”
Yes, slow growth is better than no growth.
“generally falling profits and productivity has me curious. Any idea as to why they would do this?”
If a creating a new job has a positive return on investment, it pays to create it — no matter what the direction of aggregate profits. Also, the sectors with rising profits might be hiring faster than those with falling profits (e.g., energy, materials) are firing.
Also — good catch on the number.