Labor Statistics All About Perspective
The monthly Bureau of Labor Statistics report represents different things to different people. To optimistic market analysts, April’s statistics reflected an economy that added 253,000 jobs, especially gratifying since that total far exceeds Wall Street’s predicted 190,000. The unemployment rate dropped to 3.4%, the lowest it’s been in more than four decades. More good news, in 2023’s first quarter, median weekly earnings for full-time and salaried workers were 6.1% higher compared to the same period a year ago, and outpaced the 5.8% increase in consumer prices for those three months.
To pessimists, the crucial Labor Force Participation rate remained mostly unchanged at a dismal 62.6%. A better way to express the LFP rate would be to label it “the Out-of-the-labor Force rate.” That number is 37.4%. A staggering 27.2 million are employed on a part-time basis, but some would prefer a full-time job. Part-time is categorized as 35 monthly hours or less, jobs that most likely do not offer benefits like paid vacation or health insurance. Several factors go into why employees opt for part-time over full-time, including child care conflicts, medical issues or Social Security earnings limits.
A few years ago, a prominent economist called the BLS report “a big lie.” His point was that the monthly reports are chock-full with myriad statistics that, depending on which are emphasized and which are ignored, often most any conclusion can be drawn. For example, former National Economic Council Director Larry Kudlow called the April BLS analysis “sloppy,” and dismissed the 230,000-job creation number as fiction.
The big story, Kudlow continued, is that the two months prior to April were revised lower substantially. March was lowered by 71,000 and February by 78,000, a total of 149,000 fewer jobs. April’s 230,000 created minus February and March’s 149,000 lowered means a net increase over the three months of only 104,000 – a bad number, in Kudlow’s opinion. Large downward revisions are typically a leading indicator for a weakening jobs market.
BLS reports are a snapshot in time and overlook the macro picture that often has a lasting effect. Unaccounted for in the monthly labor market data is the impact of legal immigration, 1 million or more admitted annually and granted lifetime valid work permission, and the temporary employment-based visas, which allow the entry of persons to the U.S. as varied as Major League Baseball players, au pairs and religious workers.
Over time, careers once filled by U.S. workers become dominated by foreign nationals on visas. In 2018, before Silicon Valley’s 20222023 mass layoffs, nearly threequarters of tech workers were foreign-born who displaced U.S. professionals.
In his book, “Hell to Pay: How the Suppression of Wages is Destroying America,” author Michael Lind identified the problem. Since the 1970s, driven by big business, and encouraged by what he referred to as neoliberal Democrats and libertarian conservative Republicans, American corporate strategy has been to lower costs not through technology, but by offshoring technology jobs or substituting low-wage, unskilled illegal immigrant workers in construction, farm labor, meatpacking and commercial/residential cleaning.
Correcting a half-century of U.S. worker betrayal cannot happen overnight. But solutions are available starting with mandatory E-verify, one of the provisions included in the Secure the Border Act of 2023. If the bill becomes law, a major step forward will have been taken. Should the bill die, and President Joe Biden has vowed to veto it, U.S. workers should prepare for more of the same – lower wages at best, displacement at worst.