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The Bureau of Labor Statistics announced today that the US economy created 271,000 jobs in October, a number substantially in excess of the expected 175,000 to 190,000 jobs. The unexpected job gain has dropped the unemployment rate to 5 percent. These two numbers will be the focus of the financial media presstitutes.

What is wrong with these numbers? Just about everything. First of all, 145,000 of the jobs, or 54%, are jobs arbitrarily added to the number by the birth-death model. The birth-death model provides an estimate of the net amount of unreported jobs lost to business closings and the unreported jobs created by new business openings. The model is based on a normally functioning economy unlike the one of the past seven years and thus overestimates the number of jobs from new business and underestimates the losses from closures. If we eliminate the birth-death model’s contribution, new jobs were 126,000.

Next, consider who got the 271,000 reported jobs. According to the Bureau of Labor Statistics, all of the new jobs plus some—378,000—went to those 55 years of age and older. However, males in the prime working age, 25 to 54 years of age, lost 119,000 jobs. What seems to have happened is that full time jobs were replaced with part time jobs for retirees. Multiple job holders increased by 109,000 in October, an indication that people who lost full time jobs had to take two or more part time jobs in order to make ends meet.

Now assume the 271,000 reported jobs in October is the real number, and not 126,000 or less, where are those jobs? According to the BLS not a single one is in manufacturing. The jobs are in personal services, mainly lowly paid jobs such as retail clerks, ambulatory health care service jobs, temporary help, and waitresses and bartenders.

For example, the BLS reports 44,000 new retail trade jobs, a questionable number in light of sluggish real retail sales. Possibly what is happening is that stores are turning a smaller number of full time jobs into a larger number of part time jobs in order to avoid benefit costs associated with full time workers.

The new reported jobs are essentially Third World type of jobs that do not produce sufficient income to form a household and do not produce exportable goods and services to help to bring down the large US trade deficit resulting from jobs offshoring.

The problem with the 5% unemployment rate is that it does not include any discoraged workers. When discouraged workers—those who have ceased looking for a job because there are no jobs to be found—are included the unemployment rate is about 23%.

Another problem with the 5% number is that it suggests full employment. Yet the labor force participation rate remains at a low point. Normally during a real economic recovery, people enter the labor force and the participation rate rises.

ORDER IT NOW

The bullion banks acting as agents of the Federal Reserve used the phony jobs number to launch another attack on gold and silver bullion, dumping uncovered shorts into the futures market. The strong jobs number provides cover for the naked shorts, because it implies an interest rate hike and movement out of bullion into interest bearing assets.

If the US economy were actually in economic recovery, would half of the 25-year-old population be living with parents? The real job situation is so poor that young people are unable to form households. See: http://www.paulcraigroberts.org/2015/10/29/us-on-road-to-third-world-paul-craig-roberts/

(Republished from PaulCraigRoberts.org by permission of author or representative)
 
• Category: Economics • Tags: Unemployment 
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  1. Realist says:

    Excellent points in article.

  2. AmericanaCON [AKA "Julies Yost"] says:

    There are a lot of factors which explains why United States and the rest of the west are not good countries anymore when it comes to employment. In the beginning of the 1970 there was a decline in manufacturing because of outsourcing, advancement in technology and a change in corporation management. The industrial society was replaced with a service society. On the plus side there has been an increase in number of highly paid jobs in the service industry. On the downside these jobs are not enough to cover the loss of the intermediate jobs heavily depended on manufacturing. One has to remember that a factory not only creates jobs for the working class working in the factory but also for the middle class working in the attached office building. Most of the service jobs created in the economy is the same jobs which were given to youth, disadvantaged people and the lowest educated in the society in the past.

    To keep the unemployment rates low government has massively expanded higher education. In 1965 about 10 percent of Americans had a college degree. In 2010 about 30 percent had graduated from college. The number of jobs requiring a college degree has increased but not nearly enough jobs to house all the college graduates. We see the strongest effects in those born in the 1980s and later. Unemployed or under-unemployed college graduates create “crowing out” effects. To given example. The 26 years old with a BA in accounting end up taking a job as data-entry clerk because he cannot get an accounting job. The 20 year old with a high school diploma work as a retail clerk. The 17 year old high school dropout cannot find a job at all. The last fifteen years it has becoming much worse. Today, the 26 year old with a BA in accounting end up working in retail and the 20 year old with a high school diploma has no other option than go to college. The dropout cannot find employment at all. Today, you need a MA or a P.HD for a job which just ten years ago would have been given to anybody with a BA. We have a more “educated society” with plenty of skilled workers but not nearly enough jobs to give them. South Korea, Taiwan, India and China (and plenty of third world countries) did the same thing like western countries.

    They educated their population through “free education” and generous student loans meaning massive unemployment. Education for government and the individual is only worth something if there is a financial return. The future working class of US (and other European countries) will consist of highly educated and highly indebt workers in non-skilled profession. In the same time all western countries has an influx of second and third world immigration. It gives two effects; it will become more difficult for the indigenous population to find work and there will be even more people depending on the state. The social consequences are sadly clear. People end in crime, don’t have children, never marry, and cannot save up for a home, drug addiction and so on.

    What I find so interesting is that the radical right and radical left most likely will stem from students and college graduates. In Eastern Europe you see youth turning to the far-right while Southern Europe turns to the far-left – creating more and more political instability. I don’t think it will happen in United States but well in Europe. If the elites want to protect themselves from radical parties they ought to do something about the unemployment. Still, I don’t see anything of that sort going on looking at their decision making. Bernie Sanders want to make state and community colleges tuitions for free. The consequence is that more people will attend and more people will take up student loans (although less than today). In the end there will be even more unemployed/underunemployed college graduates because of an increase in supply.

    Democrats like Sanders and Hillary do not understand, is that government intervention in education and healthcare is not needed if people had good jobs. People with good jobs are able to pay for their own health insurance and education. On the other hand Republicans like Bush and Rubio don’t understand that if you ship jobs to the third world through outsourcing or allowing cheap foreign labor (regardless of what the internal market demand) there will be more unemployment and even less people which can afford buying all the stuff which is produced. Today, many corporations make more money loaning money to their customers than selling their manufactured products. Just as in Southern Europe and Eastern Europe there will be a rise here in America. I think it is just a matter of time. Donald Trump (although I don’t think he will be elected or be successful if he was) is a symptom. People seem to be tired of the elites. Another crisis will most likely be the end of days for the elites in European Union and it will push America even more to scenario similar to that of Europe.

    • Replies: @Kiza
  3. MarkinLA says:

    Democrats like Sanders and Hillary do not understand, is that government intervention in education and healthcare is not needed if people had good jobs. People with good jobs are able to pay for their own health insurance and education. On the other hand Republicans like Bush and Rubio don’t understand that if you ship jobs to the third world through outsourcing or allowing cheap foreign labor (regardless of what the internal market demand) there will be more unemployment and even less people which can afford buying all the stuff which is produced.

    They understand this perfectly well but need you to look at the shiny object and take your attention away from reality. The donor class has bought both parties and each party needs to claim it has a solution that doesn’t involve ending free trade, guest workers, and outsourcing.

    The Democrats push “education” trying to make people think their degree in gay and lesbian studies will have some value in the world. The Republicans push tax cuts for the rich, “deregulation”, and “enterprise zones” trying to fool people into believing the government is keeping rich people from starting businesses that will create millions of jobs or there is room for another roach coach or 2 person roofing company in the economy if people just wanted it bad enough.

    • Replies: @AmericanaCON
  4. Kiza says:

    These US BLS figures have been pulled out from where the sun does not shine, as usual. I would trust much more the figures coming from Leonid Brezhnev’s Soviet Bureau of Statistics.

    Pumping out statistics on production and employment increases does pump up the economy quite a bit, but such artificial figures then result in a slump back. This is why the US economy has been see-sawing since the last crash. The lies can only get you so far. The stats pump up does the see, the reality does the saw (of the legs of the liars). Regime liar, liar pants on fire.

  5. Kiza says:
    @AmericanaCON

    I would not disagree with the first part of your write up.

    But when talking about most political issues such as the employment/unemployment, one always needs to think/talk at two different levels:
    1) what would be desirable in an ideal world and
    2) what will be the real-politic outcome.

    Your write up and the politicians talk to the masses is about 1). But when politicians go talk to money (donors), they talk only 2). This is why money always wins. Does the US money really care if a US citizen has a job? Only if the money has something to sell in the US. If there is no-one to buy and if it is cheaper to manufacture elsewhere, the money goes. I know how basic this is, but it needs to be repeated because you still keep deluding yourself: neither under Democrats nor under Republicans will there be any jobs.

    Even if Trump wins, there is only a chance the things will get worse slower than now. Under Hilary, there will be a war which, under a best-case scenario, may bring lots of jobs cleaning nuclear radiation (like Fukushima). Under Sanders, there will be a lot of talk but the crap cart will continue rolling downhill as fast as now.

    PS. There are no pensions either – the whole system is totally broke. War is the only way forward.

    • Replies: @AmericanaCON
  6. AmericanaCON [AKA "Julies Yost"] says:
    @MarkinLA

    Well, I agree with you that politicians in United States follow the donor class in a larger extent than what is reasonable and good for the country. Lobbying politicians is not only a question of donors but also what is going on among Non-governmental organizations, higher management in government, finance, Academia and so on. They are also lobbying politicians and are involved in their decision-making.

    When it comes to college major the most common major is business. The percentage of aggregated education (Liberals Arts, STEM, and the Humanities) has not changed significantly since the 1950. What have changed is as you so correctly noticed is new degrees such as gender studies. In the 1950 you had sociology, history, political science, anthropology, psychology, theology; criminology had some meaning and played some minor roll.

    Most of these people which such degrees either went into government such as police officer, teachers, museum workers, federal agents, academia, military and various bureaucratic white color positions or in business such journalism, recruiting, business analysis and so on. Even in the late as 1980 a degree in Liberal Arts or The Humanities would help you do move from the industrial floor to an office. Today, these college degrees are just a preconditioned diploma to move on to graduate school or even a doctorate. Law schools are today filled of unemployed/underunemployed college graduates. Many of them will end up the same way as before but with even more debt.

    In the 1950 and 1960 it was common for the middle class to pursue a graduate degree after years of working. Sometimes the corporation they were working for even funded it. It was possible for the working class through education and hard work to move to the middle class and the middle class to move higher through education and hard work. These paths are largely closed today – meaning more social stratification and less social mobility than in the 1950 and 1960s. All of the West show such patterns. Today, as you point out. College education is more or less a scam other than maybe medicine.

    Doctors have always been a well paid profession other than in Eastern Germany and Germany under the 1990s. It has become intensively difficult to enter medical school. Government and the private industry could easily provide more doctors but the unions and business attached to the medicine field keep people out. Why this is I have never understood. Medicine is much less difficult field than engineering. Some European countries (Poland and Hungary) are actually selling medical education to foreign students (mostly within EU) who are willing to pay. If you are from a Northern European country you can with the help of grants, loans and low cost of living become a MD fairly cheaply. Quality is less than in Western Europe but you can intern in your home country and take a few extra classes to compensate.

    To return to the Republican Party; Their “tax cuts”, “deregulation” and “enterprise zones” is of course not helping anybody. Politicians naively believe that everybody can start a business. This is of course not the case. Very few people go from college or trade to school to starting up their own business. People often start business after years of accumulation of capital and skills. You have to have platform. Historically, people worked for years in a certain trade to become a “Master” and then it was time for them to move further. The same goes for young people. They need experience until they can become highly productive workers. It is no difference from today’s youth and the previous. I don’t believe in this unscientific talk from business executives that young people are lazy. What has happened is that America (and the rest of the west) has been broken down financially and socially since the 1960s. I wonder if Americans ever rise up against the political elites and demand a change.

  7. Roberts is probably right. I know people who are working part-time jobs when they want (and need) full-time. And, as Roberts mentions, that “5% unemployment rate” doesn’t include discouraged job seekers. And then there’s the high unemployment rate among young people and college graduates, the dubious value of a “college education”. . . .

  8. AmericanaCON [AKA "Julies Yost"] says:
    @Kiza

    There will always be people who will be unemployed for various reasons. Criminals, non-skilled, newly arrived migrants and disabled have always had a tough time finding employment. That is not a concern because such unemployment is natural. It is also natural that certain professions disappear because of technological shifts. Between such shifts there will always be people who fall behind. Another important factor is war. War creates almost full employment. In 1949 the unemployment rate increased to 5.9 percent when soldiers came back home after the short occupation of Japan and Germany. The Korean War in 1950-1953 lowered unemployment. In 1953 only 2.9 percent was unemployed. In 1954 unemployment increased to 5.5 percent the coming years circled around 4 percent the coming years. What is important to notice is that unemployment was mainly a problem for non-skilled rural whites and people of color.

    For white Americans with a trade diploma or a college degree unemployment was less than 4 percent. Unemployment increased some in the end of 1950s but was than retracting under the 1960 partly because of Vietnam War. Unemployment was down to 3.6 in 1968. It would be my guess that unemployment was less than two percent or less for whites with at least a high school diploma. What is important is that you have the opportunity to improve your own social position. When it is not possible people will eventually leave if the opportunity is given. From 1954 to 1914 more than a million people left Scandinavia for United States. The Norse migrants were mostly semi-skilled and skilled labor not able to able to be gainfully employed. Many of them were able to find a place in United States – because there was a high demand of laborer for the expansion west and further colonization. I the end of 1800 there was no need for more immigration and in 1924 quotas was introduced. Is war and colonization a good thing? No, but it rapidly lower unemployment.

    The BLS has constant changed their statistics which is common among government to hide the real unemployment rate. Unemployment (and underunemployment) is most likely around 15-25 percent when combined meaning there is a reason why you get 100-500 resumes for an entry-level job.

    http://www.shadowstats.com/alternate_data/unemployment-charts

    Will there be jobs under Republicans or Democrats? Well, I do agree with you that both parties are partly run by “big money” and they have little intrest in creating jobs. Corporations are indifferent when it comes to creating jobs. It has always been so. They seek profit. The problematic part is just that major corporations has basically bought congress meaning corporations with less influence are also forced to ship jobs away so they can stay afloat. What Congress need to do is take the incentives away from corporations to send jobs abroad and sadly it can only be done through protectionism. There are some good arguments for “free trade” but I don’t think it is possible in the way over societies has been designed since the introduction of industrialism in America.

    I see Trump, Cruz and Rand differently. I see them as the first step to introduce something better. On the Democratic side Sanders is their opposite. They will change the political discourse about free trade, immigration (not in high demand), taxes, regulation and the Fed. Will they save us? No, but that is not what they are useful for. In Denmark you have a national-conservative party named Danish Peoples Party. It is currently the second largest party in Denmark. What they did under a decade was to push the mainstream Conservative and Libertarians to the right and away from big business and the Eurocrats. Is the Peoples Party a good party? Of course not, they are an Islamophobic and quasi-white nationalist party which I don’t agree much with. Still they are a necessity and have pushed the mainstream to the right on issues important for the protection of the Danish worker and they have successfully held Denmark outside the current “refugee crisis”. Being able to vote in both Denmark and United States I give my support were there can be some change. In Denmark I vote for Venstre (Liberal-Conservatives) and in United States I will cast my vote on a Trump, Cruz or Rand if they are able to win the Republican nomination. Anyway, I understand that you are skeptical. People in the West have constantly been betrayed by their elite. In Greece they thought SYRIZA would save them but the first thing they did was to sell out to the Eurocrats.

    I don’t think Hilary would start a war but she would be a horror for United States. I understand why people hope for a war – because it better than nothing. At least the military feed you and give you something to do. Sanders, well, I don’t know. He would most likely become another Barack Obama. He has not been the worst president but I wouldn’t hold him high. Clinton was better than both Bush and Obama. I wonder if there ever had been good presidents in United States.

    • Replies: @Kiza
    , @Ivy
  9. Kiza says:
    @AmericanaCON

    You are grossly underestimating the advantages of a war as a solution and please read about how broke the US pension system is.

    Total US liabilities/debt (including pensions) appears to be around $250 trillion.

    • Replies: @AmericanaCON
  10. Ivy says:
    @AmericanaCON

    The migrant resistance mounting in various Europe countries will have a beneficial side effect.

    The migrants and their increasingly discredited political and media supporters are doing the rational world a favor by Breaking the Overton Window. That will help turn the tide on other issues more away from the Merkels and toward the citizens of Europe.

    • Replies: @AmericanaCON
  11. AmericanaCON [AKA "Julies Yost"] says:
    @Kiza

    Well, I do understand that US pension system (just as in many European countries) is broke. Why is war a solution?

    Have you heard about broken window fallacy?

    • Replies: @Kiza
  12. AmericanaCON [AKA "Julies Yost"] says:
    @Ivy

    I tend to agree. The migration crisis is creating much anger among Europeans. In Eastern Europe the mainstream is going towards economic protectionism and soft nationalism, in Southern Europe the far-left is about to take over the political scene. In Western and Northern Europe you see a growing alternative right. Germany is the only country which has no alternative right or left party (of any kind) represented in their federal parliament (Bundestag) but Eurosceptic Alternative for Germany seem to be growing polling around 6-9 percent. It is not much but enough to enter parliament and will put pressure on Merkel for political change.

    Apparently, Merkel has decided not to make it more difficult to migrants to settle even though thousands of migrants are sleeping on the streets. She does not even want to turn to a soft libertarian solution – meaning migrants are responsible to provide for their own housing. When the conservative establishment is keener to appease green and socialists voters they will lose votes. The federal election of 2017 can become a real blow to CDU/CSU just as 2013 election forced the (classical) liberals (FDP) out when classical liberal (libertarian) voters finally understood that FDP in reality is not a classical liberal party but a big government/big money/big elite party representing the Eurocrats and the corporations rather than advocating freedom.

  13. Kiza says:
    @AmericanaCON

    Have you heard about war:
    1) “War is the health of the state”, Randolph Bourne.
    2) “Of course the people don’t want war. But after all, it’s the leaders of the country who determine the policy, and it’s always a simple matter to drag the people along whether it’s a democracy, a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism, and exposing the country to greater danger.”, Hermann Göring.

    You appear to have misunderstood my point. My point is that war is the only way for the US to repudiate its humongous debts, internal and external. This is why war is inevitable. The US is up to its nose, and the only way out is war.

    I am a believer in the Austrian School of Economics, no need to quote the broken window fallacy.

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