Jobs, Jobs, Jobs – Yea!

No not Steve, although it was good to see him turn up to Wednesday’s Apple announcement of the new iPad.

There is only one level of economic activity that most people care about. The rest is esoteric and distant. The one relevant question being: can I get a job?

Today we need to look at the government employment report, which told us that the economy added 192,000 jobs last month. Great. The gains were widespread across all industries, which belies the story we were hearing about structural unemployment being a growing concern. Were that true we would expect to see asymmetrical gains and losses across industry sectors, with the “old” industries still declining, and the “new” trying to add jobs. This would be more pronounced, presumably, in the wages paid in those industries actively seeking workers. The extra demand in those “new” industries would cause wages to spike as supply fell short of demand. It is that imbalance between supply and demand of appropriate labor that is referred to as the structural problem. There is little of no evidence to support that argument.

The big drag on the employment picture has now emerged to be the government sector. As all those austerity measures kick into gear we have shed about 377,000 government jobs – both Fed and state – since late 2008. This downward trend looks as if it will accelerate over the next few months and then into next year. This will bear down on the economy as all those wages are eliminated and drain spending power from the private sector. I doubt whether this drag will be sufficient to stall GDP growth, but it will assuredly reduce it.

OK so far so good. We are adding jobs across the board with just that one exception. The economy is in recovery at the level that really counts: it is allowing more people to make a living.

But.

I don’t want us to get excited by this. I want to remind you all that back only a decade or so ago the economy was routinely adding in excess of 200,000 jobs a month even in times of near full employment. That we are now approaching that, once, is not a cause for great celebration. That we have not motored well beyond and had a few months of 300,000 plus is extremely worrying. It is also the root of our ongoing problem.

So, yes, this is a relief. And, no, it is not great.

Like the boy in Oliver: “more please”