Official unemployment held tight at 9.7% in March, and the economy added 160,000 jobs, the most in three years. There is a lot of good news in the BLS report, as Dan Indiviglio finds and animates with some fascinating graphs. Unemployment seems to have peaked, discouraged workers are down 200,000 and some significant job sectors added workers, like health care, education and construction. But there are three less cheery factors I've got my eye on:
1) It's hard out there for the young
Dean Baker makes an important point here: workers over age 55 accounted for 79% of the increase in employment for March. We're seeing a trend. Their employment has increased 722,000 over the last year and fallen by 2,671,000 for everyone else.
2) Slack is still a problem
Look at two slack categories: low work hours and high part-timers. Work hours are up slightly from 33.9 to 34 (33 is the all-time low). Those working part-time for economic reasons grew by 300,000 to more than 9 million. This is rather distressing for those hoping to see a quick drop in unemployment. When demand comes back, employers will start adding work hours. But with the work week near its historic low and part-timers growing, it will be easy to add work hours by simply demanding longer hours or permanently hiring the part-timers. That increases payrolls and brings down U6, the broader measure of our unemployment. But it won't show up in the official unemployment rate (that 9.7 figure).
3) Wages are suffering.
Average hourly earnings fell by 0.1%. It is only the sixth time in 50 years that nominal wages have decreased, Baker points out. This is important both economically and politically. Economically, it illustrates the mired state of demand and employment. Earnings have stalled, which constrains consumption, which in turn constrains profits and earnings.
Politically, it matters because there is a statistically significant correlation between weak disposable income gains and House seats lost in midterm election years. Here is the graphical representation of the axiom: it's the economy stupid.
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