By David Stockman
The September establishment survey showed a 248k job gain, but that was the seasonally maladjusted, preliminarily guesstimated version which will be revised in October and November, and then re-benchmarked several more times in the coming years. So let’s take a pass on the enthusiasm with respect to this fleeting monthly delta and consider a couple of trend points evident in this morning’s release—-data points which aren’t going to get revised away and which actually provide some fundamental insight about the actual “employment situation” and the true condition of the US economy.
My favorite number is right at the top of the BLS table and it’s 155.9 million. That is the civilian labor force number for September and it compares to 154.9 million reported for October 2008 way back when the financial crisis was just erupting. The reason that rather tepid gain of 1 million labor force participants over the course of six years is important is that during the same period the working age civilian population (over 16 years) rose from 234.6 million to 248.4 million—-or by 14 million in round terms.
That’s right, the labor force grew by only 7% of the gain in adult population. That explains, of course, why the labor force participation rate of 66.0% back at the time of the crisis has plunged to a 36-year low of 62.7% in September. Or to put it another way, the employment-to-population ratio of 59.0% last month compared to just under 62% six years ago and 64.2% in the year 2000.
Needless to say, that huge 600 basis point decline in the true jobs ratio is dramatically more important than the monthly jobs delta—even if the later did trigger a run-the-stops burst by the robo traders within seconds of the release. The fact is, the plummeting rate of employment among the adult population means that the effective rate of taxation on labor hours worked has risen sharply, and will continue to do so as the baby boom ages.
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