Take a Second Look at the Jobs Report — Private Sector Jobs Are Booming

Headlines everywhere are calling the September jobs employment report dismal, and it’s showing people don’t want to work, and other various gloom and doom because the topline number was 300,000 below consensus expectations. Dismal gloom and doom everywhere, people don’t want to work, the government doesn’t want them to work.I hate to say it, but I have a totally different take. I may not be politically correct from a conservative viewpoint, but it was a solid jobs report. That’s right, it might not have been the best in history, but it was pretty strong.Here’s the key. Private sector jobs rose 317,000. Remember private sector jobs? They’re the most important jobs, and upward revisions to private jobs in July and August came to more than 100,000. So actually, private jobs rising about 414,000 with revisions were just about on target with the consensus estimates.That’s why, by the way, the stock market didn’t move much, even up slightly. It was government jobs and especially government school jobs that crashed in this report. This has to do with crazy seasonal adjustments, which can’t keep up with various school closings and openings around the country related to the pandemic.Yet I’m interested always in free enterprise capitalism, which is much better than big government socialism, and one way to track free enterprise capitalism is private employment. It seems to be doing pretty well, thank you. Sometimes you have to be empirical and objective, not political, in your economic analysis.You know what? There’s other good stuff in this report, again in the private sector. Household employment, which is mainly driven by small businesses (from which the unemployment rate derives), was up 526,000. That’s a big number.Because of that, the unemployment rate declined again to 4.8% from 5.2%. and the so-called underemployment rate called U-6 dropped to 8.5% from 8.8%, and the employment to population ratio edged up to 58.7% from 58.5%.Now that’s still too low, but a year ago it was 56.6%. So it’s kind of creeping in the right direction. not fabulous, but good. Here’s some more. Wages as measured by average hourly earnings jumped 0.6% and 4.6% for the last year. That’s good. Aggregate hours worked up 0.8%, a big number, and 4.7% for the year.Now here’s a little trick to help explain the economy. To understand consumer income or worker income, you take hourly earnings times hours worked. This is called the wage income proxy, and that comes to 9.5% over the past 12 months.That is huge. The inflation rate for the consumer price deflator was 4.3% for the year ended in August. The CPI was 5.3%but as you can see, rising wages are outstripping inflation despite what nearly all commentators are saying.Now, the inflation rate is too high, I grant you, and the Federal Reserve should stop financing the government’s reckless spending and borrowing, and the Fed should end its quantitative easing because if they don’t the inflation rate will go even higher. With all that, wages are strong.Plus, here’s a hint about future job numbers. In the last two weeks — and this from my friend Ed Hyman — continuing jobs claims have plunged by 7 million people. This is because the federal unemployment plus-up ended the first week of September. Of course, benefits matter. They will be coming into the workforce and looking for work. it may take months to play out but it shows the potential for some big future jobs numbers.Now, two final thoughts. First, even though third quarter GDP is going to be soft, perhaps from the Delta variant breakout (which is, by the way, rolling over and coming back down), our economy is still much stronger than people think. Just like today’s topline jobs number, the labor story is much stronger than people think.Second, and more importantly, we don’t need $6 trillion in additional spending, which will undoubtedly show up in the inflation rate. Inflation, remember, is a tax on the middle class. We don’t need multi-trillion tax hikes that will throw a wet blanket over the Trump-induced pandemic recovery.Higher taxes and inflation are a double tax on the middle class. We don’t need a Green New Deal that has already eroded America’s primacy in world energy markets. Natural gas, home heating oil, crude oil, gasoline, all too expensive because of Biden energy policies that have reversed Mr. Trump’s energy independence.We do not need an entitlement welfare state that would damage jobs by paying folks not to work. Senator Manchin is right. We need means testing, time limits, and workfare. We do not need another dollar of entitlement welfare spending. Not another dollar.So, the moral of my story is, my jobs take is more accurate and more interesting than anything you’ve heard or read so far. It is empirical, not political. So save America. Kill the bill.________From Mr. Kudlow’s broadcast on Fox News. Drawing by Elliott Banfield, courtesy of the artist.

Take a Second Look at the Jobs Report — Private Sector Jobs Are Booming

Take a Second Look at the Jobs Report — Private Sector Jobs Are Booming

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