Last Week's Employment Report: What's Hiding Behind the Curtain
It's time to take a look behind the "curtain" of the government's employment report. Last week's report told us fewer jobs were created than economists had forecast. The stock market rose, supposedly based on the theory that a weaker report indicated a weaker economy, which means the Fed won't raise rates, which is good for the market...or some such logic like that. Maybe next time the report comes in higher than forecast, and the stock market will fall. Who knows? And, frankly, who cares.
What's much more interesting about these reports is their subject: employment, aka "jobs." Let's look at what sort of jobs were created.
We could parse through the numbers and point to the fact that some percentage of these jobs are part time; or note that if Joe works part time at the local Walmart, and works another part time job to make ends meet, that counts as two jobs; or even that if someone reports baby sitting, that counts too. But we're thinking more broadly here.
Recently, it occurred to me that there's been a fundamental shift in the what we consider a full-time job today, and the sort of jobs our our parents a grandparents grandparents had. And it's not just the idea that Dad and Grandad typically worked for fewer companies than we do these days. Yes, we all know that spending your life working for one company has been a thing of the past for a long time now. But that's not necessarily bad, is it? For some of us, the variety of working for different companies, even having multiple careers, adds a bit of spice to life. While the security of lifetime employment may be appealing at times - especially if you've ever been laid off - I can't say I regret not having the opportunity to work for 35 or 40 years for the telephone company, or on an auto assembly line, or as a middle manager at the Westinghouse plant whose abandoned hulk still sits in the city where I grew up.
But one thing Dad and Grandad were able to do then that you or I likely can't do now is work one job and support a family. This has nothing to do with the issue of women in the workplace. It's got to do with the fact that somehow that the older generation managed a household on one income.
Part of the reason they did has to do with how they lived. A family then had one car, not two. Many families managed with one bathroom, not three or four. Kids didn't all have their own bedroom. Not only did kids not have their own room, but there were more of them per family. And, in many cases, all were supported by one parent working one job.
Sure, sometimes Dad worked a part time gig to make ends meet. And not every mother who stayed home with the kids was happy as a clam in a shell, as the old saying goes. But that's not our focus here. If a woman isn't "fulfilled" staying home with her children, no one's saying she should be, or that she shouldn't work outside the home. While we could debate whether society is better off when children are cared for by their own parents rather than being dropped off at day care, ultimately it's a personal decision which is, frankly, none of our business.
But whatever your view might be, the fact is it's increasingly rare that one parent can support a family with one job. A big part of the reason is that workers now get a smaller piece of the pie in the form of wages and benefits than they once did. This Wall Street Journal recently published a short, simple comparison of jobs then and now. Some highlights:
And this brief overview doesn't get into the debt that Americans now carry compared to those who somehow managed to raise their families on one salary. Back then, mortgages were smaller (as were houses, to be sure), and were typically paid off at some point. Credit cards were fewer and carried smaller ongoing balances. Cars were relatively cheaper, mostly bought for cash: fewer Americans carried the burden of monthly payments for leases or loans.
Then there are education costs for kids. Far too many Americans who enter college come out the other end with large loans for not only the kids, but frequently the parents too. Little, if any, of that (loans for college tuition) even existed prior to 1980.
On top of all this, if a family wanted to sock away money for the future, you could open a savings account at a bank and get 5% return on your money, without taking any risk. These days, if you can rub a couple of nickles together after paying off your mortgage, car lease, education loans, etc. you won't make a penny putting your money in a bank. You have to instead open a brokerage account and invest in stocks and other risky assets, with the possibility of losing a big chunk of it, as so many experienced in 2008.
And you wonder why people can't make ends meet on one salary?
The point of all this is to propose that our focus on the employment numbers really isn't telling us the whole story. Even if we believe that unemployment sits at all-time lows, even if we ignore the startling fact that participation in the labor market has reached all-time lows, and even if we buy the story that the economy is fundamentally sound and has been gaining strength, jobs aren't what they once were. When we use the term "jobs" now, we're talking about a different animal than when we used the term then.
What's much more interesting about these reports is their subject: employment, aka "jobs." Let's look at what sort of jobs were created.
We could parse through the numbers and point to the fact that some percentage of these jobs are part time; or note that if Joe works part time at the local Walmart, and works another part time job to make ends meet, that counts as two jobs; or even that if someone reports baby sitting, that counts too. But we're thinking more broadly here.
Recently, it occurred to me that there's been a fundamental shift in the what we consider a full-time job today, and the sort of jobs our our parents a grandparents grandparents had. And it's not just the idea that Dad and Grandad typically worked for fewer companies than we do these days. Yes, we all know that spending your life working for one company has been a thing of the past for a long time now. But that's not necessarily bad, is it? For some of us, the variety of working for different companies, even having multiple careers, adds a bit of spice to life. While the security of lifetime employment may be appealing at times - especially if you've ever been laid off - I can't say I regret not having the opportunity to work for 35 or 40 years for the telephone company, or on an auto assembly line, or as a middle manager at the Westinghouse plant whose abandoned hulk still sits in the city where I grew up.
But one thing Dad and Grandad were able to do then that you or I likely can't do now is work one job and support a family. This has nothing to do with the issue of women in the workplace. It's got to do with the fact that somehow that the older generation managed a household on one income.
Part of the reason they did has to do with how they lived. A family then had one car, not two. Many families managed with one bathroom, not three or four. Kids didn't all have their own bedroom. Not only did kids not have their own room, but there were more of them per family. And, in many cases, all were supported by one parent working one job.
Sure, sometimes Dad worked a part time gig to make ends meet. And not every mother who stayed home with the kids was happy as a clam in a shell, as the old saying goes. But that's not our focus here. If a woman isn't "fulfilled" staying home with her children, no one's saying she should be, or that she shouldn't work outside the home. While we could debate whether society is better off when children are cared for by their own parents rather than being dropped off at day care, ultimately it's a personal decision which is, frankly, none of our business.
But whatever your view might be, the fact is it's increasingly rare that one parent can support a family with one job. A big part of the reason is that workers now get a smaller piece of the pie in the form of wages and benefits than they once did. This Wall Street Journal recently published a short, simple comparison of jobs then and now. Some highlights:
- In 1980, 97% of workers at medium and large companies received health insurance: 72% of single workers paid no premiums; 51% of workers with families paid no premiums. Today that number has dropped to 3%. In addition, of those that paid, the contribution was tiny compared to what workers pay today - and the benefits were richer.
- In 1980, 38% of private sector employees received a pension plan where payments upon retirement were guaranteed by the company, ultimately to a great degree by the federal government. By 2014, that number fell to 14%. Now you've got to put away money in a 401K plan and basically make your own pension plan, which, of course, has no guarantees.
- Today's workday is typically much longer too. In 1973, 7% said they had difficulty completing their work in the time allotted. In 2016, half of U.S. workers said they worked during their free time at least occasionally.
And this brief overview doesn't get into the debt that Americans now carry compared to those who somehow managed to raise their families on one salary. Back then, mortgages were smaller (as were houses, to be sure), and were typically paid off at some point. Credit cards were fewer and carried smaller ongoing balances. Cars were relatively cheaper, mostly bought for cash: fewer Americans carried the burden of monthly payments for leases or loans.
Then there are education costs for kids. Far too many Americans who enter college come out the other end with large loans for not only the kids, but frequently the parents too. Little, if any, of that (loans for college tuition) even existed prior to 1980.
On top of all this, if a family wanted to sock away money for the future, you could open a savings account at a bank and get 5% return on your money, without taking any risk. These days, if you can rub a couple of nickles together after paying off your mortgage, car lease, education loans, etc. you won't make a penny putting your money in a bank. You have to instead open a brokerage account and invest in stocks and other risky assets, with the possibility of losing a big chunk of it, as so many experienced in 2008.
And you wonder why people can't make ends meet on one salary?
The point of all this is to propose that our focus on the employment numbers really isn't telling us the whole story. Even if we believe that unemployment sits at all-time lows, even if we ignore the startling fact that participation in the labor market has reached all-time lows, and even if we buy the story that the economy is fundamentally sound and has been gaining strength, jobs aren't what they once were. When we use the term "jobs" now, we're talking about a different animal than when we used the term then.
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