It sounds like such a big number. 195,000! There are six digits and everything. And it's better than what we're used to during the Obama presidency, so shouldn't we all be pretty pumped that the economy generated that many jobs in June?
Nope. Not when you understand the big picture.
First, this is a very big country, with a population of about 330 million and a labor force of 156 million. So the number of new jobs represents one-and-one-quarter of one-tenth of one percent of the labor force. To put it another way, there are just over 3,100 counties in the United States. Think of the one you live in. The number of new jobs created in June represents an average of 62 new jobs per county. It's better than nothing, I guess, but as a matter of statistical relevance it's barely a blip on the radar screen.
But it gets worse. The labor force is growing every month because the population is growing, and in order to merely keep pace with growth of the labor force, the economy has to add at least 150,000 new jobs every month. Let's look at the numbers for the past year:
July 2012: 153,000
August 2012: 165,000
September 2012: 138,000
October 2012: 160,000
November 2012: 247,000
December 2012: 219,000
January: 2013: 148,000
February 2013: 332,000
March 2013: 142,000
April 2013: 199,000
May 2013: 195,000
June 2013: 195,000
Keeping in mind that November and December will always show a temporary uptick because of holiday retail hiring, what we see is that there is no consistent trend of steady job growth over and above replacement levels. As Clark's daily briefing points out this morning, at this pace it would take us until 2021 to return to pre-recession employment levels. That's why unemployment remained unchanged at 7.6 percent, and U6 unemployment, which includes the underemployed and those who have given up looking, actually shot up this month from 13.8 percent to 14.3 percent.
The media will present the June number as a good one, but they will mostly ignore the context (or they may fail to understand it entirely because they are more interested in the political context).
The Obama Administration is hoping the one-year delay in implementing the ObamaCare employer mandate will get them past the 2014 elections before the mandate takes a further toll on job creation. I doubt it. Employers still know the mandate is coming, and it makes no sense to hire a lot of workers knowing full well you will just have to shed them in a year.
The job creation numbers are not good, and don't let the media or anyone else tell you otherwise.
