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  • January Jobs Report: Few Signs of a Thaw

    Photo credit: Newscom

    Photo credit: Newscom

    In January, the economy added 113,000 new jobs and the headline unemployment rate dipped to 6.6 percent, according to the Bureau of Labor Statistics. The survey of households shows very good news, namely a large increase in the number of people employed. The employment-population ratio reached 58.8 percent, matching its highest point since 2009. Average hourly earnings rose 1.9 percent since January 2013, handily outpacing inflation.

    The survey of employers showed weak job growth for the second straight month. The strongest sector was construction, which added 58,000 jobs despite January’s polar vortex. Revisions showed 34,000 more jobs created in November and December than initially reported.

    The mixed report is a reminder that month-by-month surveys are very noisy. The two big events in January – the expiration of unemployment benefits and the cold, snowy weather – would make one reasonably expect a drop in the number of people unemployed and a terrible month for construction. Instead, construction employment surged and the number unemployed was flat.

    In January, labor force participation rose to 60 percent, regaining the ground it lost in December. However, participation remains mired in a historic slump. As Casey Mulligan’s research has shown, the significant increase in income replacement policies – welfare – since 2007 have caused labor supply to shrink even as demand has recovered. That’s a problem for economic growth, the federal deficit, and America’s chances of keeping Medicare and Social Security functioning during the Baby Boomer retirement era. But more importantly, it’s a problem for those who are forced to choose between immediate assistance from the government and the hard-won rewards of a working life. Earned success in the workplace builds experience, earning power, and self-respect, and contributes to the well-being of others. Welfare is just a check.

    The Congressional Budget Office’s recent estimate that Obamacare will reduce labor supply so drastically that 2.5 million jobs are destroyed shows how much damage welfare can do to those with low present earning power. Administration defenders have tried to convince themselves to be cheery about Obamacare’s effective taxation of work. But such a reduction in work will unambiguously increase market income inequality and decrease the mobility chances of those affected, directly exacerbating what President Obama himself called “the defining challenge of our time.”

    As reports on this BLS report circulate today, keep track of how many journalists and pundits use the words “113,000 jobs created.” It’ll be a lot, because that’s how the word “job” is normally used. Every “job” is the result of labor supply and labor demand meeting in the market. Unfilled vacancies are called “job openings”, not “jobs.” Academics write of “job destruction” when any employment relationship ends. Liberals who have insisted in the last week that “jobs” will not be “destroyed” should be ashamed of their semantic shenanigans.

    Posted in Economics, Front Page [slideshow_deploy]

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