Wednesday, May 27, 2020

Upon further review, 2019 wasn't that great for jobs in the US

I talked about Wisconsin's 43rd place standing in the "gold standard" Quarterly Census of Employment and Wages (QCEW) last week, in a report that covered all of 2019. But I didn't look much at the overall US stats, and I want to thank The Progressive's Jud Lounsbury for reminding me to give that a gander.

That loss in manufacturing jobs for 2019 goes against what we had seen in the monthly US jobs reports, which claimed that the US added 64,000 jobs. This means that there are likely to be future downward revisions to 2019 job growth in that sector, and as you will see, overall job growth in 2019 was also overestimated.

I'll use the year-over-year percentage change to illustrate, to take out the distorted totals that you might see in seasonal adjustments.

Total job growth, 2019
Monthly reports +1.42%
QCEW year-over-year 1.17%

Private sector jobs growth, 2019
Monthly reports +1.53%
QCEW year-over-year +1.22%

That difference comes out to a reduction in total job growth of around 375,000 for 2019, and nearly 400,000 private sector jobs. That would end up being the smallest annual increase in jobs since 2010, and that was before we even knew what COVID-19 was.

This is the bigger point. The economy was maxing out and job growth was slowing last year. And Lounsbury's tweet notes that average wages rose by 3.5% in 2019...before inflation. So the average worker wasn't getting much of a boost from the tight labor market in 2019, there weren't as many new jobs, and in sectors such as mining and manufacturing, job growth was already falling.

So don't buy the spin that "COVID-19 stopped a booming economy." In fact, the US jobs market was already acting like one that was running out of steam with only a few people benefitting. Given how things fell apart so fast once COVID-19 broke out, to the point that we needed trillions in bailouts from the Feds and Congress (and likely need more in the future), it tells you just how tenuous our economic "growth" really was.

and why I believe it's going to be a long time before we come close to where we were at the end of 2019. Because the lack of wage and job growth meant there wasn't a lot of opportunity for everyday people to sock away money last year, and therefore there's no pent-up demand that's ready to be unlocked today.

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