Daniel Gross

April Jobs Report: What It All Means

Contrary Indicator

The April jobs report, released Friday morning, found that the U.S. economy created a disappointing 115,000 jobs for the month. On several levels, the jobs report offered more of the same.

Disappointingly weak job trend. The poor job market has been discouraging workers. The household survey, in which BLS calls up people and asks them about their employment status, produced several disappointing data points. The unemployment rate fell to 8.1 percent in April from 8.2 percent in March, but that's largely because the labor force shrank by about 350,000 people in April. The labor force participation rate, the employment-to-population ratio, and the number of people who said they are employed all fell in the month.

Companies rule, workers drool. A big feature of the current expansion has been that companies, empowered by access to global markets, declining unions, and a slack labor market, have been able to reap significant gains without having to share them with employees. In April, in the midst of another positive earnings season, we saw more of the same. Average hourly earnings bumped up by a single penny in the month, to $23.38. Because average hours worked stayed the same in April, wages basically stagnated. Over the past year, average annual wages have risen 1.8 percent, while average weekly wages have risen about two percent.

The trend is your friend. Each month, when the Bureau of Labor Statistics reports the data, it revises the figures for the previous two months. For the last few years, BLS has tended to revise the previously reported data higher. April brought more of the same. The February jobs total, originally reported as a 227,000 gain in March, was revised to a gain of 240,000 in April. Today, BLS revised the February total up again — to an increase of 259,000. The March figure, originally reported as a gain of 120,000, was revised sharply upward — to a gain of 154,000. Add it up, and BLS discovered an additional 52,000 payroll jobs that it had missed the first time around. That might not sound like much. But 52,000 jobs at an average weekly salary of $806 is an extra $1.7 billion in monthly compensation flowing into the economy.

Conservative recovery. For much of the past few years, the private sector has consistently added jobs while the public sector — state, local and federal government — has consistently cut jobs. The private sector in April created 130,000 jobs while government hacked another 15,000 jobs. The long-term trend is unavoidable and unmistakable. Since May 2010, government has reduced employment by 1.028 million. Since February 2010, the private sector has created 4.247 million jobs. The last time the government employed this few people was in June 2006. FYI: between January 2001 and January 2009, the government sector added 1.74 million jobs.

Political football. The monthly jobs numbers have become a major political talking point — as well they should be. The election is only six months away. This report offers some fodder for both sides. The major presidential candidates will be asking citizens if they are better off today than they were four years ago. Plainly, the labor market isn't. But with each passing month of gains, the question becomes a bit more complicated. In April 2012, there were 111.02 million private sector payroll jobs in the U.S. That's higher than the 110.985 million total from January 2009. In other words, the private sector has clawed back all the jobs it shed under the Obama administration. Alas, there remains the problem of the 4.62 million jobs lost between December 2007 and January 2009. And in a nation whose population grows every month, simply treading water isn't good enough. Taking into account the public-sector job losses, there were 572,000 fewer payroll jobs in the U.S. in April 2012 than there were in January 2009.

Those who think poor jobs numbers dictate electoral destiny would be well advised to spend some time looking through the BLS Web site. When President George W. Bush entered office in January 2001, there were 132.466 million payroll jobs. In November 2004, there were 132.182 million payroll jobs. He was the first president in recent memory to be re-elected after having seen net job losses over the course of his presidential term.

Daniel Gross is economics editor at Yahoo! Finance.

Follow him on Twitter @grossdm; email him at grossdaniel11@yahoo.com.

His new book, Better, Stronger, Faster, will hit the shelves on May 8. You can pre-order it now.

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