June jobs report offers two very different snapshots of US economy
Friday's jobs report points to trouble ahead for the economy in the coming months
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The headline jobs numbers just reported by the Department of Labor for the month of June showed that firms continue to hire workers back. The report counted 372,000 new hires in June — although negative revisions from previous months brought that number down by about 74,000.
Still, these appear to be bullish numbers and suggest that the economy could steer clear of a crash-landing recession.
But there’s more to the story that most of the media and the White House are reporting. Another survey by the Bureau of Labor Statistics finds a reduction of 315,000 Americans working last month.
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So, what we have here today is actually a story of two reports on employment and hiring pointing in opposite directions.
Let me explain. The first Friday of the month, the Labor Department number crunchers spew out two snapshots on jobs. One is called the "payroll survey of employers." The second is called the "household survey" — which samples real people about their job situation.
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Usually, these surveys run together in tandem — or at least in the same direction. But not in the last several months. Since March, one survey says that more than 1 million jobs have been gained and the other says that there are fewer Americans working today than three months ago.
What accounts for the difference? First, hundreds of thousands of Americans hold two jobs, so one person shows up in the payroll survey as employed twice.
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But more importantly, the payroll survey is more likely to count the jobs created at larger businesses and corporations, whereas small startup firms and self-employment are often overlooked in the official job count. What this suggests is that big businesses are doing pretty well, but hiring by small entrepreneurial companies appears to be shrinking. Fewer Americans are starting businesses or are self-employed — thanks to the Biden war on business.
Since small businesses are critical for future job growth, these are troubling signs for the economy in the months and years ahead.
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The other headache revealed in this latest report is that over the past year wages are still trudging behind inflation — 5.1 percent for wages compared to 8.6 percent for prices. More and more Americans are going into debt on their credit cards just to make ends meet and that’s a trend that can’t end well.
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This probably explains why — despite the White House’s boasts about how strong the economy is — most Americans outside the La La Land of Washington don’t agree. The latest polls show more than 8 of 10 voters say the country is headed in the wrong direction. These are even worse numbers than Jimmy Carter faced.
So, Washington may be opening the champagne bottles over the latest labor market news, but on Main Street USA not many people are celebrating.
Stephen Moore is a senior fellow at the Heritage Foundation and an economist with Freedom Works. His latest book is "Govzilla: How the Relentless Growth of Government Is Devouring Our Economy" (Post Hill Press, December 2021).