Last Friday (February 5, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – February 2021 – which is consistent with a view that the US labour market recovery is stop-start at present and not reducing the jobs lost since March 2020 at any reasonable rate. prediction. Payroll employment growth was stronger in February. The labour force survey data showed consistent employment growth but not strong enough to really do anything about unemployment and the broader labour wastage captured by the BLS U6 measure which was constant at 11.1 per cent. Participation was steady in February, which when coming off a recession is a sign that employment growth is subdued. I remain wedded to the view that the US will have to stabilise the health situation before they will be able to sustain any reasonable economic recovery. Whether the vaccination process in train allows for that is an unknown at present. But with states like Texas seemingly in denial with respect tot the virus, I suspect bad outcomes will emerge in the month ahead. And with the Blue Democrats trying to be Republicans (denying a reasonable stimulus) that doesn’t augur well.
What simple measures might we use to see whether a system is working or not? Well that depends on the objective of the system. For me, one of the worst things that can happen in a social context is a capitalist system is involuntary unemployment because work is intrinsic to our beings. From the time we crawled out of the slime we have had to transform nature in order to survive. That reality goes to the heart of human existence and gives us purpose and builds our sense of network and cooperation and giving. I know all the arguments – this is a filthy capitalist system and why would we want people to be wage slaves – I am older now. I have been a left-winger all my life. I heard these arguments decades ago. And until those revolutionary armies that are apparently hiding out in the suburbs arms themselves and appear in the streets, I am thinking of the actual societies we live in and have to make the best of. We would spend our whole life times talking about revolution while workers around the world are being made to bear the costs of the failing neoliberal system.
My Wednesday blog post with a few snippets. Don’t forget to enrol in our MOOC which begins next week. Also, some news from Britain that shows once again the British Labour Party has the gun aimed straight at its foot. And some comments on yesterday’s Australian government decision to increase the unemployment benefit by $25 per week and claiming this was appropriate – when it still means the recipients are $163 per week below the accepted poverty line. Enforced poverty by a government that refuses to create enough jobs and then punishes the victims of the policy failure. This all amounts to War and we can sing along to that after getting angry about the rest.
The latest data from the Australian Bureau of Statistics – Labour Force, Australia, January 2021 – released today (February 18, 2021), shows that the labour market is stumbling along and the pace of recovery has slowed considerably. Employment increased by 0.1 per cent (29,100) in the month, half the growth that was recorded in December 2020. Unemployment fell by 34,300 to 877,600 persons and the unemployment rate fell by 0.2 points although that was largely due to the decline in the participation rate. Underemployment also fell by 0.4 points and the broad labour underutilisation rate (sum of unemployment and underemployment) fell by 0.6 points, but some of that is due to the special monthly hour movements in January. The main uncertainty now is that the recovery is slowing and the current (extensive) government support is due to end in March 2021. Given the labour market is still quite a margin from where it was in March 2020, the idea that the government would withdraw its fiscal support is not a compelling option. Overall, the recovery is still too slow and more government support by way of large-scale job creation.
Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today he is writing about the uneven impact of the COVID employment crash. This theme – the spatial unevenness of fluctuations in aggregate economic activity – is one we often explore (in our past research together) because understanding these patterns is essential for designing appropriate policy interventions. It is one of the reasons we both favour employment creation programs that respond to local conditions, like the Job Guarantee. It is also the topic a new large grant application that we are currently putting in (as part of the annual funding circus in Australia). Anyway, while I am tied up today it is over to Scott …
Payroll employment highly subdued. 408 thousand workers exit the labour force due to lack of jobs. Overheating potential zero. In last month’s assessment – US labour market – things are getting worse again as the virus spreads (January 18, 2021) – I predicted things would get worse given the trajectory of the virus. I have formed a strong view that nations have to deal with the health issue before they can expect the economy to open up again. No nation can ignore a spiralling death rate and avoid some restrictions which damage the economy. The evidence demonstrates that the nations that have largely suppressed the virus are doing the best in economic terms. Last Friday (February 5, 2021), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – January 2021 – which is consistent with my prediction. Payroll employment growth has slowed rapidly (only increasing by 49 thousand). But the labour force survey data is a bit difficult to interpret this month due a population benchmarking changes (see below). In terms of the household survey, employment rose by 201 thousand and the labour force was reduced by 408 thousand, meaning that official unemployment fell by 606 thousand and the unemployment rate fell by 0.4 points. Taking out the population control effect, the labour force shrank by 200 thousand. While the signals are a little confused, the data is showing there is no strong recovery going on at the moment as the health crisis intensifies. There is an elevated degree of excess capacity. I consider that the US will have to stabilise the health situation before they will be able to sustain any economic recovery. And we can disregard New Keynesian macroeconomists who are suffering from attention deficit problems it seems, and claiming that the economy is close to overheating and cannot absorb the proposed stimulus from the new Administration. The stimulus is actually too little!
Last week (February 1, 2021), the Australian Chamber of Commerce and Industry, which represents the business lobby, demanded the Australian government cut the unemployment benefit back to less than $A40 per day but at the same time it also demanded the Government extend wage subsidies to businesses. It is repugnant that the business culture in Australia is so impoverished, that the key business lobby group wants unemployed workers who cannot get a job because there are not enough jobs on offer to be forced to live at income support levels that are well below conventional poverty lines. But, at the same time, it supports businesses putting their own hands out to government for more. It is also stupid. They don’t seem to realise that providing an environment for strong wages growth produces the best conditions for profits. Yet these characters just want to accelerate the ‘race to the bottom’ which is a self-defeating strategy.
The latest data from the Australian Bureau of Statistics – Labour Force, Australia, December 2020 – released today (January 17, 2021), shows that the labour market is still improving but the pace of recovery has slowed considerably.Employment increased by 0.4 per cent (50,000) in the month, which normally is a reasonable result but is nearly half the growth that was recorded in November 2020. Unemployment fell by 30,100 and the unemployment rate fell by 0.2 points even though the participation rate rose by 0.1 points. It is always a good sign when there is both employment and labour force growth with the former stronger than the latter. Underemployment also fell by 0.8 points and the broad labour underutilisation rate (sum of unemployment and underemployment) fell by 0.8 points. The main uncertainty now is that the recovery is slowing and the current (extensive) government support is due to end in the first-quarter of 2021. Given the labour market is still quite a margin from where it was in March 2020, the idea that the government would withdraw its fiscal support is not a compelling option. Overall, the recovery is still too slow and more government support by way of large-scale job creation.
US Department of Labor’s latest unemployment claimant data is worrying with the claimants in the week to January 9, 2021 rising to 1,151,051 a shift of 231,335. This is the highest level since the week ending July 25, 2020 and confirms what we now know – that unless a nation deals with the health crisis and gets the virus infections under control (preferably to the point of zero community transmission), it cannot hope for a sustainable economic recovery. The data is the result of lockdowns leading to layoffs in the hospitality and recreation sectors which has pushed the US economy back into contraction. The rise in new claimants follows the payroll data that revealed that employment had fallen by 140,000 (net) – see this blog post for analysis of that data release – US labour market recovery has ended as health problem intensifies (January 11, 2021). And given the nature of the employment most impacted, you can be sure that socio-economic inequalities will have risen. I will write about that last issue another day.
It has been clear that with the virus infections in the US increasing rapidly and with the lack of fiscal support from government, that the labour market conditions would probably start to deteriorate after a brief period of recovery following the first blush with the virus. I have been predicting that since December 2020. The latest data reveals that assessment was accurate. On January 8, 2021, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – December 2020 – which reveals a deteriorating or static situation, depending on the weight one gives to the payroll data relative to the household survey. Payroll employment fell by 140 thousand. In terms of the household survey, with employment and the labour force hardly moving, unemployment and the unemployment rate was unchanged. While the signals are a little confused, the data is showing the recovery has ended as the health crisis intensifies. I consider that the US will have to stabilise the health situation before they will be able to sustain any economic recovery. The US appears to be going in the opposite direction to that.