The New Jobs Report Obama Doesn’t Want You to See
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During his time in office, President Barack Obama has loved to crow about many things, but one of his boilerplate recitations is how many jobs have been created under his administration. It’s been very important to Obama to be able to say that he’s single-handedly rescued the country from the Great Recession caused by the 2008 subprime lending crisis.
His Bureau of Labor Statistics (BLS) spouted rosy job numbers recently that claimed that more people were working than ever before. “Since I signed Obamacare into law [in 2010], our businesses have added more than 15 million new jobs,” stated Obama at his final presidential press conference the other day, offering up a number that represented a gross amount, rather than a net figure. But according to a new study by Princeton and Harvard economists Alan Krueger and Lawrence Katz, not all was as it seemed.
From 2005 to 2015, the number of Americans occupied by what the two professor’s term “alternative work” soared from 10.7 percent in 2005 to 15.8 percent in 2015. The term “alternative work” is their appellation for work performed by “temporary help agency workers, on-call workers, contract company workers, independent contractors or freelancers” — what other commentators have referred to as the “gig economy.” In the gig economy, work is unsteady, comes without a fixed paycheck and provides virtually zero benefits.
In the economists’ study, the percentage of people working in each of the aforementioned categories — temporary help workers, on-call workers, independent contractors and contract company workers — grew substantially between 2005 and 2015; temporary help workers went from .9 percent to 1.6 percent of all American workers, on-call workers went from 1.7 percent to 2.6 percent of workers, independent contractors went from 6.9 percent to 8.4 percent of workers and contract company workers went from 1.4 percent to 3.1 percent of workers.
Professor Krueger, who actually served as the chairman of Obama’s White House Council of Economic Advisors, noted that “94 percent of net job growth in the past decade was in the alternative work category.”
Of that figure, he wrote, “60 percent was due to the [the rise] of independent contractors, freelancers and contract company workers.” Stated another way, almost all of the approximately 10 million net jobs created in the period from 2005 to 2015 were nonstandard, non-9-to-5, untraditional roles.
“Workers seeking full-time, steady work have lost,” declared Krueger, while sarcastically admitting that “many of those who value flexibility and have a spouse with a steady job have probably gained.” For both types of workers, wage growth has been nonexistent because career advancement is usually not an option in these categories.
Corroborating this data were numbers released by the BLS that showed that in October and November of this year, the number of part-time workers grew at a far greater rate than full-time workers. In October, the number of U.S. full-time workers fell by 103,000 while the number of part-time workers grew by 90,000.
November saw an increase in full-time workers of 9,000 and an increase in part-time workers of 118,000. When discounting seasonal jobs, the November figures are worse; 628,000 full-time jobs were lost while 678,000 part-time (largely retail) jobs were created.
Other bad news included the number of people holding multiple jobs due to insufficient wages or other reasons. On a seasonally adjusted basis, this amount rose by 61,000 persons to a total of 7.8 million. On an unadjusted basis, the number was still a large increase of 57,000 to 8.1 million — the highest number in more than 100 years. If one goes back to the total number of jobs added for November, one is then forced to ponder how many of those jobs were actually held by the same person.
These figures may also explain people’s hourly average earnings slipping by .1 percent in November, the worst change in more than two years.
Among other discoveries cited by the economic study was the fact that young workers made up the largest growth component of contractors who don’t receive any type of benefits, even if they work full-time. This is often the case in the entertainment industry, where young freelancers are hired on a long-term basis without benefits being offered, an arrangement known as “permalance” employment.
All of this adds up to workers who are more leveraged, more disenfranchised, and less well taken care of than those who were employed prior to the post-2008 Great Recession. It also points out why, despite the lowest unemployment numbers in nearly a decade (4.6 percent nationally as of November), the growth in people’s real, disposable personal income has fallen since 2014 and remains mired at 2011 levels.
Also left out of the employment numbers is the figure for people who have opted out or are locked out of the workforce, which currently stands at an all-time high of more than 95 million.
For these reasons and many more, President-Elect Donald Trump’s Inauguration Day can’t come soon enough. Ideally, Trump, in conjunction with Treasury Secretary Steve Mnuchin and Commerce Secretary Wilbur Ross, will be able to reverse these trends and start spitting out more honest numbers that reflect “real” job gains rather than illusory ones.
Regards,
Ethan Warrick
Editor
Wealth Authority
Editor
Wealth Authority
