211,000 Payroll Jobs Not Enough

Popular Economics Weekly

Friday’s unemployment report was disappointing for a number of reasons, mainly because we are not yet close to full employment, and there is no sign of inflation. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 319,000 to 6.1 million in November, following declines in September and October.

This is hardly approaching full employment. The report said these individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job. Over the past 12 months, the number of persons employed part time for economic reasons is down by 765,000.

Yet because 211,000 payroll jobs were added to payrolls, the calls are now for the Fed to begin to raise their interest rates.


Graph: Marketwatch

Most companies added jobs in November. Construction firms hired 46,000 people; restaurants added 32,000 employees and retailers beefed up staff by 31,000. The lone exceptions were the energy industry and Hollywood. Cheap oil has stunted business for energy producers, which have cut 124,000 jobs in 2015. The motion-picture industry also shed 13,000 jobs, though there’s been little change in employment over the past year.

But employment among manufacturers was basically flat, because of a strong dollar and weak global economy that’s reduced demand for their exports. In a separate report Friday, the government said U.S. exports fell to the lowest level in three years.

Raising interest rates now will cut back our exports even further (and so manufacturing), which are the bastion of higher income earners. This is while the EU is lowering their interest rates, making their exports more competitive.

ECB Chairman Mario Draghi promised he “would do whatever it takes” to boost economic growth in the Eurozone, and has just lowered their interest rates to a negative -0.3 percent. Mr. Draghi said there was “no particular limit to how we can deploy any of our tools” in terms of what the central bank could do to foster demand and, crucially, fulfill its stated goal of lifting inflation to 2 percent.

The report said the change in total nonfarm payroll employment for September was revised from +137,000 to +145,000, and the change from October was revised from +271,000 to +298,000. Over the past 3 months, job gains have averaged 218,000 per month.

This is hardly robust job growth, when November’s total dropped 87,000, and September’s total was still weak. And the inflation rate isn’t back to their 2 percent target. Nor is the labor market at full employment. We therefore believe such a rate increase would be premature and dampen consumer demand, at a time when consumers are already saving much more than they are spending.

Harlan Green © 2015

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

About populareconomicsblog

Harlan Green is editor/publisher of PopularEconomics.com, and content provider of 3 weekly columns to various blogs--Popular Economics Weekly and The Huffington Post
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