...and that's about it.
Meltdown in the jobs market By Alan Tonelson
Published on Tuesday, May 26, 2009
WASHINGTON: If you want to know how desperate the powers-that-be have grown to spot an approaching economic recovery, look no farther than the irrationally exuberant reactions to the government's April employment report.
This latest in the always eagerly awaited monthly government series was universally billed as a sign that the U.S. economy has turned a major corner. No one was rash enough to claim that the numbers represented improvement in an absolute sense. But a strong consensus insisted that however massive they seemed at first glance, the job losses recorded by the Bureau of Labor Statistics showed that economic deterioration is slowing — allegedly the first sign of a bottoming process.
A closer look — in fact, anything more than a cursory look — shows something else entirely: an economy that's grown completely dependent on government for net job creation. Karl Marx, wherever he is, may be encouraged, but anyone viewing the private sector as the only source of genuine, sustainable prosperity should be appalled.
The hoopla stemmed from the finding that overall U.S. job loss dropped from 699,000 in March to 539,000 in April. In other words, nearly 23 percent fewer Americans were laid off than the month before.
As big a slowdown as that represents, it's only a single reading. These figures can jump around. (February overall job loss totaled 681,000, the January figure was 741,000, and the December figure another 681,000.) Moreover, they're usually revised by the BLS — often upward.
And for lots of reasons, more than half a million monthly job losses at this stage of a recession that officially began in December 2007 is mind-boggling. After all, the earliest job cuts tend to be the easiest to make — they represent the fat, at least relatively speaking. And through March, job cuts had reached 5.16 million. With these latest 539,000, many employers must be getting to the muscle. That doesn't exactly signal lots of business confidence in a prompt, meaningful recovery.
But huge as they remain, the overall job loss figures don't tell us everything we need to know about the economy's health. For they include employment trends for that huge part of the country that exists substantially outside the economy — the government
. To gauge more accurately the economy's real state, it's critical to focus on the private-sector jobs figure. And here the picture looks much gloomier.
In April, for example, government at all levels added 79,000 workers. This means that private-sector job loss was actually 611,000, not 539,000 — nearly 12 percent higher.
Moreover, the BLS reported that most of these new government jobs wouldn't even be long-lasting; they ''mainly'' stemmed from a hiring spree necessitated by the upcoming 2010 Census.
In fact, government hiring has softened the nation's employment losses throughout the recession with only two exceptions — December 2008 and this past March. Even during the January jobs massacre, government payrolls increased by 8,000.
Another perspective on government's growing employment role comes from measuring public-sector employment as a share of total employment. When the recession was officially one month old, in January 2008, government workers made up 16.22 percent of total U.S. workers. By April 2009, this percentage had risen to 17.08 — an impressive rise in less than 18 months.
Moreover, this figure has been rising steadily for the entire decade. In 2000, only 15.80 percent of all American workers served in the public sector. As recently as 2007, this figure was 16.13 percent. The all-time high was 19.35 percent in 1975 — not exactly a banner year for the economy.
And here's an even more sobering figure. Since America's recovery from the last, brief recession — officially March to November 2001 — on an April-April basis, the government has created more jobs (1.71 million) than the private sector has lost (1.69 million).
But there's worse to come. Just like nostalgia, the private sector isn't what it used to be. Government has profoundly affected many industries for decades, meaning that performance — including on the employment front — isn't solely determined by market forces.
And nowhere is this more true than in the health-care sector. It's become so heavily subsidized that it's eminently reasonable — and in fact long overdue — to take it out of the private sector entirely for classification purposes and lump it in with the government.
When government is defined in this more realistic way, its role in recent American job-creation becomes absolutely dominant. For example, that latest April employment report? Health-care payrolls increased by 17,000. Add these new workers to the 79,000 conventionally defined new government workers, and public-sector employment jumped by 96,000 that month. Therefore, private-sector job loss was arguably 628,000, not 611,000. That's 2.78 percent greater.
Since the recession was one month old, health-care employment has increased from 13.14 million workers to 13.55 million — a gain of 410,000, or 2.13 percent. As a result, ''real'' private-sector employment during this period sank all the way from 102.55 million to 96.26 million — a decrease of 6.29 million, rather than the conventional private-sector figure of 5.71 million.
BLS data only track health-care employment since 1990, but these figures reveal that over the past nearly two decades, the ''real'' government share of total U.S. employment has risen substantially — from 24.17 percent to 27.31 percent on an April-April basis. During this period, the conventionally defined government sector has risen only from 16.76 percent of total employment, to 17.08 percent on that same April-April basis.
In other words, the ''real'' public sector is not only nearly 60 percent bigger than the official public sector today. It has been growing more than six times faster (by just under 13 percent over these past two decades versus 1.9 percent).
For roughly the same 20-year period, America's powers-that-be have often toyed with the idea that the nation doesn't need manufacturing jobs anymore — and employment in U.S. industry has fallen nearly 33 percent, to 12.15 million.
Judging from recent trends, maybe they're starting to toy with the idea that the nation doesn't need any other private-sector jobs.
Tonelson is a research fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards
(Westview Press). His columns can be found at http//:americaneconomicalert.org.