"Jobs are plentiful and employers are giving fairly large wage increases," Robert Gay, managing director at Fenwick Advisers LLC in Rye, New York, and a former Fed economist, said before the report. "Outside housing and manufacturing, the rest of the economy is doing pretty well and continuing to create jobs."That sounds pretty good on the surface, until I dig a little deeper. From Kiplinger:
Even so, take the robust gain of 180,000 jobs last month with a grain of salt. Most likely, a portion of March's increase was a bounceback from hiring that was postponed in February by bad weather, particularly in the construction and retail trades.An opinion in USA Today points in the same direction:
Another sign of potential concern: Hiring in professional and business services, such as engineering and accounting, fell for the first time in many months. This could signal that the services sector, which accounts for about 80% of total employment, is feeling some of the slowdown that seems to have been confined mainly to manufacturing until now.
The net increase for March, plus revisions to the preceding two months, leave the monthly average employment increase at 152,000 for the first quarter of this year, compared with 188,000 for all of last year. We expect the average to fall to around 110,000 for 2007, yielding about 1.3 million jobs, as companies facing slowing profit growth try to contain labor costs.
The unemployment rate will creep up to about 5% by year end from the 4.4% rate posted in March. [emphasis mine]
A slowing in the economy will likely soon lead to a deterioration in the job market, says Richard Moody, chief economist at Mission Residential in Austin, Texas. He expects job growth to ease to between 100,000 and 115,000 a month later this year.Adding credence to Kiplinger's concern about the decline in professional and business services hiring is this other nugget from USA Today:
"This might be the high water mark" for job creation for the near future, Moody says.
Alan Blinder, a former Federal Reserve vice chairman, fears that in the next 10 to 20 years, this country could see 40 million jobs in such areas as accounting, health care and computer programming move overseas. He says the Internet and other communications advances make the physical location of these workers all but irrelevant. Even Wall Street is pushing for regulatory relief to partially offset the exploding global competition for investment banking services. [emphasis mine]The direction appears to be downward for a majority of workers faced with unemployment:
All of this makes for an interesting business model. But it raises troubling questions about the direction of the American economy and society.
Across America, more than 30 million people have been forced out of jobs since the early 1980s, the Bureau of Labor Statistics reports, and regaining lost incomes has not been easy. Nearly 50 million new jobs have been created over that same period, according to the bureau, so there are always new opportunities but more often than not at lower pay. Among those who have lost work, only a third held new jobs two years later that paid as well as those that were lost, according to the bureau’s surveys of displaced workers. Another third of those displaced were in jobs that paid, on average, 15 to 20 percent less than their previous employment — while the final third had dropped out of the labor force entirely.Which helps to explain this:
Commerce Department data released today show that the share of national income going to wages and salaries in 2006 was at its lowest level on record, with data going back to 1929. The share of national income captured by corporate profits, in contrast, was at its highest level on record. Which in turn helps to explain this: Ford pays new CEO $39.1M in 4 months
And Washington wonders why most Americans see their glass as being half empty.