Dark Clouds Loom Over Upbeat Labor Report

After the Bureau of Labor Statistics released its monthly report on Friday, the headlines virtually screamed out that not only had the economy created 321,000 jobs, but that wages had improved nine cents an hour,  increases of .02 percent month-on-month and 2.1 percent year-on-year. The year-on-year statistic is unchanged since 2009 when the recovery began and, in a healthy economy, should be 4 percent. When Wall Street crows about a wage hike of nine cents an hour a wage that, for those who work the average weekly 34.6 hours, represents less than a paltry $13.50 wage hike each month, things are still bad.

Joe Guzzardi

Underneath the seemingly rosy November picture are troubling facts that belie the excessive cheering. The BLS report has the usual built in deception. For example, people who work 35 hours or less at multiple part-time jobs are counted as full-time employees because of their aggregate hours logged. November’s “stop the presses” total of 321,000 jobs doesn’t distinguish between full and part-time workers. According to the Peterson Institute of International Economics, people who work for a single hour are counted as having a job.

Beyond the jobs data manipulation are persistent, stubborn realities. More than 6.5 million Americans are involuntary part-time workers forced into their situations by the absence of decent paying full time jobs. The labor force participation rate has been steady at about 62.8 percent since January. And, as of October, 92 million people aren’t in the labor force which means they aren’t included among the officially unemployed because they’re not actively looking for a job.

Bottom line: there simply are not enough jobs for people who want one. In support of the overall lack of employment opportunities, the alternate labor survey taken among 60,000 households found that only 4,000 jobs were created in November.

The Economic Policy Institute notes that the U.S. has a 5.8 million jobs shortage. Factor in natural population growth (births minus deaths) of 1.6 million, and add to it the 4 million Americans who turn 18 each year,  as well as nearly one million legal, work authorized immigrants who arrive annually, and the U.S. will need a much more aggressive jobs creation policy than it’s had since Obama took office.

Worse, a dark cloud looms on the horizon regarding job availability and wages. Last month, Obama announced his immigration executive action that will covert five million previously unemployable immigrants (because of their alien status) to legally work authorized. U.S. Citizenship and Immigration Services will begin processing applications in May, 2015.

Abruptly, 5 million more potential workers will enter the labor pool to compete with unemployed and underemployed Americans for scarce jobs. Such a sudden influx of millions more workers, many of them unskilled, will have a devastating effect on wages. Former Clinton Secretary of Labor and current University of California Berkeley Public Policy Professor Robert Reich, commenting on President George Bush’s failed amnesty programs, said that regardless of what individual opinions might be on illegal immigration, it means “fewer jobs for Americans.”

“The only reason any job remains unfilled is because the wage is too low,” Reich said. “Require it to be filled with an Americans and employers have to raise the wage.”

The federal government’s goal should be tight labor markets that will advance Americans’ wage structure. Obama’s executive action does the opposite, and will further drive down wages, especially for the marginally employed minority workers.

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