April Job Numbers Appear Improved... Are They Really?

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

The April job reports are out. The good news is unemployment fell to a four year low, certainly at year six in Obama's Presidential tenure strikes a positive note. Or does it? At the same time the number of people employed part time rose as well as strong indications are showing the Affordable Care Act (ACA aka ObamaCare) will have a long term negative impact on the USA economy.

The following is an interesting analysis and one that certainly has some credibility.

AEI - US job growth in April beat economist expectations as nonfarm payrolls rose 165,000, and the jobless rate fell to a four-year low of 7.5%. But the report contained worrisome signs that President Obama’s health care reform law is hurting full-time, high-wage employment.

While the American economy added 293,000 jobs last month, according to the separate household survey, the number of persons employed part time for economic reasons — “involuntary part-time workers” as the Labor Department calls them – increased by almost as much, by 278,000 to 7.9 million. These folks were working part time because a) their hours had been cut back or b) they were unable to find a full-time job. At the same time, the U-6 unemployment rate — a broader measure of joblessness that includes discouraged workers and part-timers who want a full-time gig – rose from 13.8% to 13.9%.

What’s more, there wasa 0.2 hour decline in the length of the average workweek. This led to 0.4 percentage point drop in the index of average weekly hours, “equaling the largest declines since the recovery began,” notes economist Dean Baker of Center for Economic and Policy Research.

Let’s see, more part timers and fewer hours worked. Economist Douglas Holtz-Eakin says what we’re all thinking: “This is not good news as it reflects the reliance on part-time work. … the decline in hours and rise of part-time work is troubling in light of anecdotal reports of the impact of the Affordable Care Act.”

Anecdotal reports like this one from the Los Angeles Times: “Consider the city of Long Beach. It is limiting most of its 1,600 part-time employees to fewer than 27 hours a week, on average. City officials say that without cutting payroll hours, new health benefits would cost up to $2 million more next year, and that extra expense would trigger layoffs and cutbacks in city services.”

Now, there is the possibility that government furloughs are affecting the length of the workweek. (Though at the same time, steady if unspectacular private-sector job growth shows the Fed may be continuing to effectively offset any negative sequestration impact.) Here is JPMorgan on the subject:

Government shed a trend-like 11,000 jobs last month, a number which bore little evidence of a meaningful sequestration impact. Similarly, it is hard to directly link the decline in the average workweek to furloughed government workers, as the workweek only measures private industry hours. It’s conceivable the decline in the workweek may be related to the Affordable Care Act, but a simpler explanation is that it had jumped two ticks in the prior two months, and through the month-to-month noise is just settling into a stable trend.

We’ll see. But the combo of data and anecdotes should at least raise red flags about how health care reform could be permanently altering the structure of the American labor market. {Read More}

I report, you decide...

The Charts... (click to enlarge)





Via: Memeorandum