Today's Jobs Report: We're Poorly Prepared For the Storm Ahead

Today’s Bureau of Labor Statistics jobs report shows jobs losses worsened sharply in September. Hours worked fell even more sharply than jobs suggest losses in October could be quite severe. Because the number of paid hours worked per week was reduced sharply in September, weekly wages also fell even before adjusting for inflation.

This is an ominous sign for households that already face unprecedented financial pressures with little or no current savings.

The report shows net job losses of 159,000 in September including a gain of 9,000 government jobs; the private sector lost 168,000 jobs in September. This is the ninth consecutive monthly loss of total jobs and the 10th consecutive loss of private sector jobs. The economy has lost 760,000 jobs since December; excluding gains in government jobs. The private sector has lost 983,000 jobs (almost 100,000 a month) since last November.

It’s important to appreciate that even the sharp loss of jobs in September represents only a 0.1 percent loss of overall jobs. But because of reduced hours worked per week, the total number of private sector hours worked in September plunged by 0.5 percent. This converted a small gain in wages per hour (before inflation) to a small decline in weekly wages and a big decline in total wages. When BLS reports on prices and real wages in two weeks (Oct. 16) we will likely find that even modest inflation pushed weekly wages down about 0.3 percent in September to purchasing power levels that are down 0.6 percent year over year.

The equally important implication of the sharp reduction in hours worked is that it is the typical pattern employers use before cutting more jobs. For example, machinery manufacturers cut 4,000 jobs, 0.3 percent, in September but they reduced total hours by 2.5 percent. Financial activities cut 17,000 jobs, 0.2 percent, but cut total hours by 0.5 percent. Construction cut 35,000 jobs, 0.5 percent, but total paid hours worked were cut by 1.3 percent. Even education and health services—a category that added 25,000 jobs, up 0.1 percent—cut the number of total paid hours worked by 0.2 percent. Even before considering job losses due to hurricanes, October is shaping up to be a very bad month for jobs and wages.

Along with the now-chronic condition of job losses in virtually every industry that faces imports (or is capable of exporting) or that can be easily be moved to cheaper sites offshore, September shows broad weakening in those industries where soaring debt helped create jobs in the past. Bars and restaurants lost 5,000 jobs in September, private health care and education bureaucracies added only 25,000 jobs. Even local governments began to show the budget strains as their jobs cuts outside public education all but offset small gains in their education bureaucracies. (My full table of industry job losses and gains [1] is attached.)

Those on Wall Street and elsewhere, who have just discovered the weak economy, may also find of interest my updated industry jobs table since January 2001. The past 7 2/3 years has seen only 3.14 million, 2.8 percent, more private sector jobs. This is the weakest overall job growth of any such period since the 1930s. But even worse than the weakness in overall job growth is the remarkable distribution along the lines noted above. Private Health Care bureaucracies added 2.4 million jobs since January 2001 and bars and restaurants added another 1.5 million jobs for a combined 3.9 million. Aside from these, the U.S. private sector has lost over 750,000 jobs in the past seven-and-two-thirds years.

These graphs on job losses [2] and charts on industry job performance [3] show that even over the 82 months since the end of the previous recession in November 2001, the private sector has added just 5.8 percent to total hours worked. This is not only the weakest on record but is less than one-third of the 17.8 percent average growth in past cycles. Hours worked in manufacturing over the past 82 months has plummeted by an unprecedented 12.8 percent.

Today’s report provides more evidence of just how poorly is the economy prepared to weather the current storms that Wall Street’s wealthy geniuses have created.