Let’s get into the illusion of the strong jobs report.
Generally weaker than expected data was punctuated by yet another better-than-expected nonfarm payroll report. This comes despite the fact that earlier in the week the ADP private sector payroll report came in slightly below estimates at 201,000 jobs added in May. Also, 5,000 manufacturing jobs lost—the third consecutive monthly decline in manufacturing jobs. These are the important jobs. Not only are they higher paying, but they’re productive. And they also lead to exports, which improve our balance of payments.
But the official number, which came out Friday morning, the consensus estimate, was 220,000 jobs. And that followed the 223,000 jobs that was originally reported for April.
Well, the actual number, according to the government—280,000.
280,000 jobs created in May, far exceeding the 220,000 jobs that had been forecast. So it’s beat by 60,000 jobs. They had a slight downward revision to April—221,000—and they upwardly revised March somewhat. So overall, more jobs than had been anticipated.
Now, the unemployment rate did increase to 5.5 percent as a few hundred thousand more people reentered the labor force—which is bucking the trend. The labor force had been declining. Now some people have come back to the labor force. In fact, the labor force participation rate is back up to 62.9 percent from 62.8 percent. Remember, the lowest it’s been is 62.7 percent. So at 62.9 percent, we’re not far from the low. And certainly there is no indication that the trend has changed.
Of course, a lot of these people who have reentered the labor force don’t even want to be there.
Remember, when we’re talking about labor force participation, when you look at older people—workers in their 60s and 70s—participation is at record highs. It’s younger Americans—Americans in their teens, 20s and 30s—that’s where the participation is at all-time record lows. And a lot of the older guys—who are now in the workforce, who were not in the workforce before—don’t even want to be there. They’d rather be retired. But unfortunately they can’t afford that luxury anymore, so they need jobs.
And of course a lot of them don’t even want full-time jobs. They want part-time jobs. So a lot of these 200,000 jobs that were created are in fact part-time jobs. And they represent workers who would assume not even work in the first place. But, of course, a lot of these older Americans, they don’t want full-time jobs, so it works perfectly for them.
They don’t want full-time jobs for a couple of reasons. One, they want to be at least semi-retired. They don’t want to work 40-hour weeks. They’re just trying to work enough to make ends meet. They need to pay their bills. So if they can do that with a part-time job, that’s what they want to do.
But also, remember, if you’re over 65, you’re getting Social Security. But as you get a job, of course you still pay Social Security taxes, right—even though you’re collecting Social Security. But at some point, as you earn a certain amount of money, you start losing your Social Security benefits, which acts as an added marginal tax. So people on Social Security may want to work a little bit to make just enough money to make ends meet, but they don’t want to earn too much money where they end up paying a very high marginal tax (because they start losing some of their Social Security benefits).
That’s also too part of the illusion of the strong jobs report. I get into the data that came out in the podcast episode above. Tune in now and catch more of the Peter Schiff Show here at Truth In Media.