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Friday, June 05, 2015

Another Paint-By-The-Numbers Friday

David Stockman calls it Another Paint-By-The-Numbers Friday:

It’s another paint-by-the-numbers Friday. The headline number was predictably rosy, but please don’t look underneath the hood. The jobs engine is still coughing and sputtering.

For instance, among the grand total of 280,000 new jobs reported for May, the entire goods producing sector—-construction, manufacturing, mining and energy—- accounted for just 6,000 or 2% of the gain. And that’s not just a monthly aberration. Employment in the most productive sector of the US economy has been shrinking for 15 years, and is 2.4 million or 11% below its pre-recession level.

Its worth noting that the average pay in the goods sector during May amounted to $47,000 at an annualized rate—-or in the vicinity of a living wage. Not so with the big gainers in today’s report, however.

According to the BLS, the nation gained 57,000 jobs in the leisure and hospitality sector—-that is, bartenders, waiters, bellhops and hot dog vendors at the ball park. While the talking heads were cheerleading the headline number, of course, they naturally failed to note that from a production and income point of view, these are just one-third jobs. Owing to low hourly rates and only about 26 hours per week on average, the annualized pay equivalent in the leisure and hospitality category is just $16,000.

Moreover, unlike the high productivity, high pay goods sector, the waiters and bartenders sector has been growing for 15 years and accounts for 43% of all the net new jobs gained since the pre-recession peak. That’s right. According to the BLS establishment survey there were just 3.7 million more jobs in the entire US economy during May than at the pre-recession peak, but fully 1.6 million were in the bread and circuses economy.