Commentary and analysis of labour force data releases.

Australian labour market – recovery over and more fiscal stimulus is needed

The latest data from the Australian Bureau of Statistics – Labour Force, Australia, October 2020 – released today (October 15, 2020) shows that the recovery has stalled on the back of the Stage 4 restrictions in Victoria as that state dealt with the second virus wave. However, Tasmania and the Northern Territory also experienced employment losses in September 2020 and that is in part due to the locked internal borders that remain throughout Australia. Employment growth declined by 29.5 thousand but the rise in unemployment was only 11.3 thousand because the participation rate fell by 0.1 points. So, hidden unemployment rose (the slack sitting outside the official labour force). If we take a broader view of the labour underutilisation rate, underemployment rose by 0.1 points to 11.3 per cent and combined with the uneployment rate, the broad labour underutilisation rate rose by 0.2 points to 18.3 per cent. If we add in the rise in hidden unemployment then that figure rises to 20.3 per cent. Any government that oversees that sort of disaster has failed in their basic responsibilities to society. It must increase its fiscal stimulus and target it towards large-scale job creation.

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Governments should use their fiscal capacity to ensure our youth always can find a job

In my monthly labour market updates for Australia, I always examine the teenage labour market. Not much media coverage is given to that cohort in this context. But as our societies age and require our younger workers to be more productive than their parents to maintain material living standards (even though we should be reappraising what is an environmentally feasible benchmark to maintain), how we deal with school-to-work transitions, vocational training, university education is a major issue. The fact that governments all around the world have been prepared to impose massive costs on the younger generation as they obsessively pursue fiscal surpluses is one of the scandals of the period and will have long-term consequences for society. Recent Australian research evidence, which is consistent with outcomes from similar international studies, provides strong evidence to support the case that governments should always ensure there are enough jobs for our young population and that fiscal austerity undermines that requirement. Running fiscal deficits doesn’t undermine our children’s futures. Starving them of job opportunities at crucial transition points in their lives definitely undermines their future. We should understand that and stop listening to economists who say otherwise.

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US labour market – floundering now despite modest gains

On October 2, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – September 2020 – which shows that while employment continued to grow, the rebound has moderated significantly. Further, the unemployment rate fell by 0.5 points to 7.9 per cent but only because the participation rate fell by 0.3 points, which saw less workers in the labour force. If the participation rate had not fallen, then there would have been only a marginal improvement in the unemployment situation. The sources of that participation decline are not disclosed. The problem facing the US is that the lack of economic support from the Federal government means that the huge pool of unemployment will take years to reduce and the damage will accumulate. How far the recovery can go depends on two factors, both of which are biased negatively: (a) How many firms have gone broke in the lockdown? (b) Whether the US states will have to reverse their lockdown easing in the face of a rapid escalation of the virus in some of the more populace states. I do not see appropriate policy responses in place at present. From abroad, it looks like the US government is stepping back when it should be engaging in supporting all incomes and introducing large-scale job creation programs.

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Latest employment data in Australia continues sorry tale and what I would do about it

On Tuesday (September 22, 2020), the ABS released the latest data for – Weekly Payroll Jobs and Wages in Australia, Week ending 5 September 2020 – which gives us the most up-to-date picture of how the labour market is coping with the on-going restrictions. This data provides more accurate estimates of the impact of the harsh Stage 4 restrictions that have been imposed in Victoria to address the Second Wave of the coronavirus. Overall, payroll employment has fallen by 0.9 points since July 25, 2020, when the lockdowns began in earnest. Unsurprisingly, payroll employment fell in the six-week period ending September 5, 2020 in Victoria by 2.8 points. Employment has also fallen in NSW by 0.5 points in the last 6 weeks. The Victorian case is about lockdown. NSW is in decline because of failed macroeconomic policy, which goes to the performance of the federal government. The fact that the first recovery period failed to regain the jobs lost was an indicator that the policy intervention was insufficient. The second-wave job losses tell us clearly that more needs to be done by the Federal government. I provide some clues as to where an extra $100 billion might be spent below.

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Australian labour market – improving modestly but much more fiscal stimulus is required

The latest data from the Australian Bureau of Statistics – Labour Force, Australia, August 2020 – released today (September 17, 2020) shows that employment rose by 0.9 per cent as the economy struggled to shift back into growth mode. In part, the moderate result was due to the impact of the Stage 4 restrictions in Victoria as that state dealt with the second virus wave. Victoria was the only state or territory to endure negative employment growth in August. As the virus situation is coming under control and the lockdowns are easing, Victoria will rebound fairly quickly – how far depends on the damage done during the closures. The lack of external migration is also seeing the labour force growth moderate significantly, which allowed unemployment to decline by 86.5 thousand on the back of the modest employment boost. Participation also rose. The reality is that if we take a broader view of the labour underutilisation rate (adding in the hidden unemployment who have left the labour force since March) to the official unemployed and underemployed, we find around 19.5 per cent of the available labour supply is not working in one way or another. Any government that oversees that sort of disaster has failed in their basic responsibilities to society. It must increase its fiscal stimulus and target it towards large-scale job creation. My overall assessment is: (a) The current situation can best still be described as near catastrophic; (b) The Australian labour market needs massive fiscal policy intervention targetted at direct job creation; (c) The pre-pandemic need for a fiscal stimulus of around 2 per cent has changed to a fiscal stimulus requirement of several times that; (d) The Federal government’s attempts to date have been seriously under-whelming and we will soon see the results of their withdrawal of the unemployment benefit supplement (a ridiculous decision); and (e) Any government that oversees that sort of disaster has failed in their basic responsibilities to society.

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How would Job Guarantee wages be set?

It is Wednesday so some snippets and some music – sad music this week because it signals the death of one of the great pioneers of Jamaican music last week. I am holding a Mini-Music Festival today – right here on my blog. Join in an celebrate a legend. But a few economics matters first pertaining to the Job Guarantee and the nonsensical arguments I have been seeing in the media about it being a system of enslavement and not better than a system that forces workers into unemployment.

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Federal government cutting spending as payroll data shows employment still in decline

On Tuesday (September 8, 2020), the ABS released the latest data for – Weekly Payroll Jobs and Wages in Australia, Week ending 22 August 2020 – which gives us the most up-to-date picture of how the labour market is coping with the on-going restrictions. This data provides more accurate estimates of the impact of the harsh Stage 4 restrictions that have been imposed in Victoria to address the Second Wave of the coronavirus. Unsurprisingly, payroll employment fell in the six-week period ending August 22, 2020 in Victoria by 2.5 per cent. But what was also surprising was that employment fell in every other state or territory bar South Australia and NT. The Victorian case is about lockdown. The other declines are about failed macroeconomic policy, which goes to the performance of the federal government. The fact that the first recovery period failed to regain the jobs lost was an indicator that the policy intervention was insufficient. The second-wave job losses tell us clearly that more needs to be done by the Federal government. I am not holding my breath.

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US labour market improvement continues but there is still a long way to go

On September 4, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – August 2020 – which shows that while employment continued to grow, the rebound has moderated. All the major aggregates are heading in the right direction. Employment is up, participation is up, the labour force is recovering and the unemployment rate and broader measures of labour underutilisation are falling. The problem facing the US is that the lack of economic support from the Federal government means that the huge pool of unemployment will take years to reduce and the damage will accumulate. How far the recovery can go depends on two factors, both of which are biased negatively: (a) How many firms have gone broke in the lockdown? (b) Whether the US states will have to reverse their lockdown easing in the face of a rapid escalation of the virus in some of the more populace states. I do not see appropriate policy responses in place at present. From abroad, it looks like the US government is stepping back when it should be engaging in supporting all incomes and introducing large-scale job creation programs.

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Payroll employment falling again as second-wave and inadequate policy response bites

Last week, the Australian Bureau of Statistics released the latest data – Retail Trade, Australia, Preliminary , July 2020 – which showed that retail turnover in July 2020 had risen by 3.3 per cent, the second month of improvement since it fell off a cliff in the two months from March. The exception was for Victoria, which is now in Stage 4 lockdown, which caused retail sales to fall by 2 per cent. Today, the ABS released the latest data for – Weekly Payroll Jobs and Wages in Australia, Week ending 8 August 2020 – which gives us the most up-to-date picture of how the labour market is coping with the on-going restrictions and the reimposed of harsh Stage 4 restrictions in Victoria. Unsurprisingly, payroll employment fell in the fortnight ending August 8, 2020 in Victoria by 1.6 per cent. But what was also surprising was that employment fell in every other state or territory bar Tasmania and ACT. The Victorian case is about lockdown. The other declines are about failed macroeconomic policy, which goes to the performance of the federal government. Regular readers will know that I have routinely analysed this dataset ever since it first became available in March this year. It uniqueness is that it provides the most recent data upon which an assessment of where the labour market is heading. The data shows that after a partial recovery from the downturn, payroll employment is declining again. The fact that the first recovery period failed to regain the jobs lost was an indicator that the policy intervention was insufficient. The second-wave job losses tell us clearly that that more needs to be done by the Federal government. I am not holding my breath.

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Australian labour market improvement moderates before the Stage 4 Victorian storm is about to hit

The Australian economy continued to recover somewhat as the government eased the strict lockdown on businesses. However, the pace of improvement moderated significantly. The latest data from the Australian Bureau of Statistics – Labour Force, Australia, July 2020 – released today (August 13, 2020) shows that employment rose by 0.9 per cent, well down on the rate of improvement last month. The participation rate also rose as job opportunities increased, and the labour force change outstripped the employment increase, which meant that unemployment rose by a further 15,700 thousand. More than a million Australian workers are now unemployed, which does not include the 235 thousand that have dropped out of the labour force since March 2020. That means the official unemployment rate of 7.5 per cent continues to underestimate the actual impact given that the labour force is still 235.2 thousand lower than it was in March 2020. Adding those ‘hidden unemployed’ workers back to the underutilisation rate suggests that 21.3 per cent of the available labour supply is not working in one way or another (unemployment, hidden unemployment, and underemployment). Any government that oversees that sort of disaster has failed in their basic responsibilities to society. It must increase its fiscal stimulus and target it towards large-scale job creation. The problem now is that with the Stage 4 lockdowns in Victoria now in place as it deals with the second virus wave, it is almost certain that the August figures will reveal a deterioration. My overall assessment is: (a) The current situation can best still be described as catastrophic; (b) The Australian labour market needs massive fiscal policy intervention targetted at direct job creation; (c) The prior need for a fiscal stimulus of around 2 per cent has changed to a fiscal stimulus requirement of several times that; (d) There is clear room for some serious fiscal policy expansion at present and the Federal government’s attempts to date have been seriously under-whelming; and (e) Any government that oversees that sort of disaster has failed in their basic responsibilities to society.

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