2014 April employment numbers -- a closer look (ignore the MSM)

The headline news: 288,000 jobs created in April and the unemployment rate plunged from 6.7% to 6.3%.  No surprise, given that the end of Snowpocalypse was supposed to result in a surge in employment.

It was higher than consensus estimates (~210K - 215K), but those consensus estimates were based on preconceptions of the previous months' numbers -- see below.  At the time of these estimates, they were looking at an average of 194.5K jobs the last two months.

	1st estimate	2nd estimate	3rd estimate
11/2013	203	241	274
12/2013	74	75	84
01/2014	113	129	144
02/2014	175	197	222
03/2014	192	203
04/2014	288

So it turns out even during Snowpocalypse, job growth was strong.  And as I keep explaining, the media only pays attention to the headline number, not the final number.

Myth #1 -- Main driver of growth is retail (low paying jobs)

The common myth has been that the majority of jobs growth has been in low-paying sectors, typically retail (aka McJobs).  But this is absolutely untrue.  Comparing healthcare, professional and retail, retail job creation has trailed much higher paying jobs.  Under Obama (since Feb 2009) job growth hasn't been driven by retail.

Myth #2 -- Federal employment crowding out private

Aside from the 2010 census spurt, federal employment, as measured in total numbers of workers and as a percentage of total private, nonfarm jobs, has been shrinking fairly steadily.  Under Obama (since Feb 2009) there are about 100K fewer federal workers.

Myth #3 -- Bush's tax cuts resulted in higher job growth

This will probably drive a lot of people angry, but the two presidents with the highest job creation in the last 30 years, from the start of their administration, were Clinton and Carter.  The worst to date, was George Bush and his twin tax cuts in 2001 and 2003.

Obama's record, in terms of total job growth, ranks above Bush, but let's consider that we're talking about the worst recession since the Great Depression.  The chart shows cumulative job creation since the start of each president's administration, which makes it all the more remarkable that Obama's administration's job creation record is nearly on par with Bush'24.

With the predictions of surging employment growth through the rest of the year, Obama's administration may exceed Reagan's record!

Myth #4 -- The unemployment rate drop came primarily from lower labor participation

Actually, this is half-true.  Without a doubt, the total labor participation rate dropped, which contributed to the decline.  But the participation rate has been dropping for years, regardless of the direction of the unemployment rate -- this points to an interesting divergence.

It appears that when looking at the non-seasonally adjusted data (the only data available for this particular set of numbers) of the participation and unemployed rates, you can see some clear changes in the work force.

The labor force, as measured from age 16+, hasn't grown much, but the 65+ portion of the labor force has.  Much more people are trying to work past retirement age, than before.

A look at the change in the participation rate since Feb 2009 shows that 65+ participation has grown while the total 16+ demographic has decreased.  Both groups have shown an increasing reduction in the unemployment rate since Feb 2009.

So the unemployment rate for 65+ has gone down because there are a lot more seniors working today, even as more of them remain in the work force.  Whereas the unemployment rate for everyone else has gone down because fewer people under age 65 remain in the work force.

In essence, older (retirement-age) workers are partially crowding out all others; their crowding out is only partial, of course, because their total numbers are relatively small in comparison to the total work force.  However, we should remember these changes in the nature of employment as baby-boomers continue to reach retirement age in larger numbers, in part because income disparity is the likely driver of old-age continued labor.  Without correction in income disparity, we'll see more retirement-age adults crowding out more employment.

The bottom line is, we're experiencing very good job growth -- to date, better than under Bush and from trough to current, a rate that is comparable to all other presidents the last 30 years -- and we may yet hit spectacular numbers shortly.  But it's not enough; we really need even stronger job growth -- Fed mandate on inflation notwithstanding -- to prevent a lost generation of nonworking Americans, crowded out over the next 30 years.