Commentary and analysis of labour force data releases.

US Labour Market – stronger at the start of the year

On February 7, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – January 2019 – which reveals a labour market was stronger in January by a considerable margin. Employment growth was robust and the participation rate rose by 0.2 points, which meant that the labour force change outstripped the net jobs added and unemployment rose as a consequence. But the employment-population ratio rose by 0.1 points. The Broad labour underutilisation ratio (U-6) remains high, and rose in January by 0.2 points, because there were more underemployed workers. An examination of the transition probabilities show that there is still strong growth into employment from those who were previously outside the labour force (in inactivity). The corresponding entry from outside the labour force into unemployment continues to fall. So the US labour market is absorbing new entrants straight into employment at increasing rates, which is a good sign. Overall, these appears to be excess capacity that can still be tapped if growth is strong enough. And while workers are still being absorbed into paid employment from outside the labour force is a sign of a strengthening labour market, as regular readers will know, I have documented the strong bias in the US to lower paid and precarious work. So getting workers into paid employment is one thing. Paying them decent wages and providing them with secure jobs is another.

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Australian labour market – full-time jobs shrink as quality of work falls

The Australian Bureau of Statistics released of its latest data today (January 23, 2020) – Labour Force, Australia, December 2019 – which continues to show that the Australian economy is in a weak state with a fairly moderate labour market performance being recorded for December 2020. The culprit – the Australian government – which is starving spending by its obsessive pursuit of a fiscal surplus. While unemployment fell by 0.1 points as a result of the employment growth, full-time employment also fell. So all the net job opportunities created were part-time which suggests that the quality of the overall employment mix has deteriorated. In the last six months, 74 per cent of net employment change has been in the part-time labour market. The broad labour underutilisation (unemployment plus underemployment) is at 13.4 per cent and has been stuck around that level for months. There is no dynamic – policy or otherwise – present, which will see this massive pool of available labour brought back into productive use anytime soon. That alone, is a indictment of failed policy. The unemployment rate is 0.6 percentage points above what even the central bank considers to the level where inflationary pressures might be sourced from the labour market. The Government is thus deliberately inducing deflationary tendencies into the economy and it is the workers that are bearing the brunt. My overall assessment is that the Australian labour market remains a considerable distance from full employment. This persistence in labour wastage indicates that the policy settings are too tight (biased to austerity) and deliberately reducing growth and income generation. There is clear room for some serious fiscal policy expansion at present. The Federal government is willfully undermining our economy with its irresponsible policy position. The impact of the bushfire crisis is likely to start being felt in next month’s figures.

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Racial prejudice in Britain rises with unemployment

When I was a relatively junior academic, one of the things I was interested in was how labour market prejudice is influenced by the state of the economic cycle. This was a period when Australia was undergoing a deep recession (early 1990s) and it was clear that hostility to immigrants had risen during this period. I was interested to see whether this was related. The interest goes back to my postgraduate days when I was studying labour economics and we considered labour market discrimination in some detail. Then, it was clear from the literature, that employers who used racial profiling to screen job candidates would lose out if the labour market was strong, but could indulge their negative views about different racial groups without loss in times of recession. But we didn’t do much work on supply-side attitudes – that is, what do other workers think? In more recent times, I have done detailed research projects with mental health professionals studying the best way to provide job opportunities for young people with episodic illnesses. The research revealed that one of the problems in placing these workers in conventional workplaces is the prejudice that other workers displayed towards them. We worked on ways to attenuate that resistance. So I have had a long record of studying and being interested in these matters. In this blog post, I consider whether prejudice is counter-cyclical. In the UK, for example, the British Social Attitudes survey found that in 2014, around a third of British people were racially prejudiced and this ratio spiked during the GFC. Clearly, there are many factors contributing to this rather distasteful result, but if austerity is exacerbating the underlying factors, then we have another reason to oppose it. This research also bears on the Brexit debate.

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US Labour Market – not yet at full employment despite low unemployment

On January 10, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – January 2019 – which reveals a labour market that that is still adding jobs, albeit at a slower rate than it was last year. The December performance showed that this moderation has not yet impacted on the unemployment rate – meaning that the employment growth is keeping pace with the underlying population growth with participation steady as indicated by the steady employment-population ratio. The Broad labour underutilisation ratio (U-6) remains high (but fell in December by 0.2 points) and the official unemployment is now hovering around levels not seen since the late 1960s. The U-6 indicator fell because underemployed workers are finding low-wage jobs in the service sector. Wages growth fell below the 3 per cent level for the first time since mid-2018 and real wages growth failed to match annual productivity growth. The worry is that the jobs being added represent a significant hollowing out of jobs in the median wage area (the so-called ‘middle-class’ jobs), which is reinforcing the polarisation in the income distribution and rising inequality. There is no hint, yet in the data, that a recession is coming any time soon or that that US labour market is at full employment despite the low unemployment rate.

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Australian labour market – tepid performance in November

Today’s Australian Bureau of Statistics release of its latest data – Labour Force, Australia, November 2019 – confirms, as if we need confirmation, that the Australian economy is in a weak state with a very tepid labour market performance being recorded for November 2020. The culprit – the Australian government – which is starving spending by its obsessive pursuit of a fiscal surplus. Employment growth was positive this month but almost all of it was part-time. Unemployment fell slightly The broad labour underutilisation (unemployment plus underemployment) is at 13.5 per cent and has been stuck around that level for months. There is no dynamic – policy or otherwise – present, which will see this massive pool of available labour brought back into productive use anytime soon. That alone, is a indictment of failed policy. The unemployment rate is 0.7 percentage points above what even the central bank considers to the level where inflationary pressures might be sourced from the labour market. The Government is thus deliberately inducing deflationary tendencies into the economy and it is the workers that are bearing the brunt. My overall assessment is that the Australian labour market remains a considerable distance from full employment. This persistence in labour wastage indicates that the policy settings are too tight (biased to austerity) and deliberately reducing growth and income generation. There is clear room for some serious fiscal policy expansion at present. The Federal government is willfully undermining our economy with its irresponsible policy position.

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US labour market – quantitative gains but qualitative losses

On Friday (December 6, 2019), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – November 2019 – which reveals a labour market that that is still adding jobs. The November performance was very strong in quantitative terms. The payroll employment change was well above the year’s average and the official unemployment rate remains at very low (relative) levels. The employment-population ratio is steady indicating that the labour market is producing jobs growth in line with population growth. The Broad labour underutilisation ratio (U-6) remains high (but fell in November by 0.1 points) even though the official unemployment is now hovering around levels not seen since the late 1960s. The worry is that the jobs being added represent a significant hollowing out of jobs in the median wage area (the so-called ‘middle-class’ jobs), which is reinforcing the polarisation in the income distribution and rising inequality. There is no hint, yet in the data, that a recession is coming any time soon.

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Australia labour market deteriorating – symbolises massive Federal government policy failure

After yesterday’s disastrous wages growth data release, today’s Australian Bureau of Statistics release of its latest data – Labour Force, Australia, October 2019 – confirms, as if we need confirmation, that the Australian economy is weakening and the labour market is is poor shape. The culprit – the Australian government which is starving spending by its obsessive pursuit of a fiscal surplus. It is likely that the economy will thwart that ambition anyway – in the wrong way – by reducing tax revenue below that projected. Meanwhile the well-being of millions of Australian workers is being abused by our elected officials. Employment growth was negative. Full-time employment fell sharply. The participation rate fell. Unemployment rose even though the participation rate fell. Hidden unemployment is up. Underemployment is up. The broad labour underutilisation is at 13.8 per cent with an upwards bias. The unemployment rate is 0.8 percentage points above what even the central bank considers to the level where inflationary pressures might be sourced from the labour market. My overall assessment is The current situation can best be characterised as deteriorating from an already weak state. The Australian labour market remains a considerable distance from full employment and the gap is widening. This persistence in labour wastage indicates that the policy settings are to tight (biased to austerity) and deliberately reducing growth and income generation. There is clear room for some serious fiscal policy expansion at present. The Federal government is willfully undermining our economy with its irresponsible policy position.

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The obesity epidemic – massive daily losses incurred while the policy response is insufficient

The Brexit issue in Britain has been marked by many different estimates of GDP (income) loss arising from different configurations of the Brexit. The media is flush with lurid headlines about the catastrophe awaiting Britain. As regular readers will appreciate, I am not convinced by any of those predictions. But as I said the day after the Referendum in this blog post – Why the Leave victory is a great outcome (June 27, 2016) – that when I tweeted it was a ‘great outcome’ I didn’t say that good would come out of it. I also didn’t suggest that it would be a short-term recovery of prosperity or that the workers would benefit. I was referring to the fact that class struggle now has a clearer focus within the British political debate. There is now a dynamic for a truly progressive leadership to emerge and bring the disenfranchised along with them and wipe out the neo-liberal hydra once and for all.” I think that is lost in this debate. When the British Labour Party claim the latest agreement will irrevocably damage workers’ rights or environmental protections they seem to be implying that they will never be in power again. No legislation or regulation is irrevocable in a democracy. But being part of the EU will always tie a nation to the EU’s rules which usurp any national interests. That is why I maintain strong support for the concept of Brexit. But amidst all these predictions of gloom and doom, I was listening to the radio last week and heard some statistics that are truly alarming. The on-going GDP losses from the obesity epidemic in the UK, which will increase over time rather significantly, are significant when compared to the estimates of GDP loss arising from Brexit. I wonder why that fact isn’t part of the daily narratives coming out from the Remain crowd to justify their view that the 2016 Referendum result should be disregarded so they can have another go at getting their own way!

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Australian labour market – staggering along with elevated levels of labour waste persisting

The Australian Bureau of Statistics released the latest data today – Labour Force, Australia, September 2019 – which reveals the fairly weak labour market conditions have persisted. Employment growth barely kept pace with the underlying population growth. With the weakness impacting on job opportunities, the participation rate fell which meant that the weak employment growth still outstripped the rise in the labour force and so unemployment fell by a bit. A decline in unemployment is sometimes a cause for celebration. But when it occurs under these circumstances – weak employment growth and declining participation – it signals a poorly functioning labour market starved of demand. The ony positive sign was that full-time employment increased but that was really just a reversal of last month’s decline. The fact is that full-time employment is still below the level attained in December 2018. Broad labour underutilisation is at 13.5 per cent. Both the unemployment and underemployment rates are persisting around these elevated levels of wastage making a mockery of claims by commentators that Australia is close to full employment and that the fiscal position represents something desirable. The unemployment rate is 7 percentage points above what even the central bank considers to the level where inflationary pressures might be sourced from the labour market. This persistence in labour wastage indicates that the policy settings are to tight (biased to austerity) and deliberately reducing growth and income generation. My overall assessment is the current situation can best be characterised as remaining in a fairly weak state.

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Governments can always create jobs if they choose

Last week, I posted a graph in this blog post – RBA cuts rates as a futile exercise as Dr Schwarze Null demands fiscal action (October 2, 2019) that showed that over the 12 months to August 2019, 312 thousand jobs have been created (net) in Australia. The stunning result is that 301 thousand (96.5 per cent) of those net jobs have been in the public sector. The private labour market is thus stagnating. I was interested to delve further into that result to see if I could bring more detail to bear. That is what this blog post is about. A data exercise to enrich our understanding and knowledge.

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