Unspinning The Labor Markets
The press is swooning over this morning’s decrease in new jobless claims numbers. Case in point:
“(Reuters) – New applications for U.S. unemployment benefits hit a seven-year low last week while consumer prices recorded their largest increase in 10 months in April, pointing to a firming economy.”
“The economy’s outlook was further brightened by other data on Thursday showing factory activity in New York state expanding at its quickest pace in nearly four years in May.”
“”It conveys the message of solid economic activity. Labor conditions continue to improve and I expect this will be validated by payroll reports over the next few months,” said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.”
Wow, hard hitting stuff, truth to power and all that.
Before we pop open the bubbly, let’s take a look at what the administration and its boosters probably will not talk about today. The unemployment claims numbers is only a metric of newly unemployed workers. But precisely how many more of those can we possibly find. We’ve had a steady decrease in the proportion of Americans in the labor force. Over the past several years, the average time spent unemployed has risen to historic highs. It’s inevitable that eventually almost all of the workers who are not employable in a stagnant economy will run out. Looking at the whole picture, including today’s revelation that those who are employed had their real wages fall by 3% last month and the data in the JOLTS report last week which shows no upward spike in job availability, and the data showing the chronic problem of long-term unemployment essentially unchanged, and you’ll see that a metric which shows nothing more than a drop in the number of people who are newentrants into the unemployment compensation system is nothing to brag about.
Article originally published on Forbes.com.