Jobs Situation Getting Worse - Not Better

Automatic Data Processing (ADP) is a private company that caters to the needs of the business community.   This company puts out a monthly employment report derived from payroll data of their clients.   Their latest report has some economic pundits putting on their rose-colored glasses to look at the economy, because the report says the private sector added  297,000 new jobs in the month of December -- a far larger number than any other month of 2010.

But don't start celebrating just yet.   The Wall Street Journal points out the report may be flawed.   For one thing, this same report vastly overestimated the jobs created in November of 2010 and may well be doing the same for December.   For another, the numbers are not seasonably adjusted.   Most of those jobs, if they exist, are probably short-term holiday hires that will disappear now that the holiday season is over.

And as it might occur to many of you, a business that sells it services to other businesses is going to do a lot better if it can convince those businesses that the economy is improving.   Frankly, I think this report is not worth very much.   And that would seem to be born out by Gallup's newest survey (which has been remarkably accurate regarding employment over the last few months).

Gallup shows the unemployment figures are getting worse -- not better.   They show the end of December unemployment figure was 9.6% -- up from 9.3% in the middle of December and 8.8% at the end of November.   That's a clear upward trend in unemployment.

But the real unemployment figures are even worse.   The 9.6% number doesn't include the people looking for full-time work while working a part-time job.   It also doesn't count the people who would like to work but have given up finding a job in this recession economy (where there are ten qualified applicants for every job opening).   There are a minimum of 1.3 million people who are frustrated and stopped looking for work.   When the part-time workers and the long-time unemployed are added in, the unemployment number jumps up to 19% (an increase over 18.5% in the middle of December and 17.2% at the end of November).

The fact is that while there is some job growth and it is predicted to continue in 2011, it is not the robust growth needed to bring down the unemployment figures.   This growth will be doing good just to keep up with the number of new people entering the job market (which would just keep the figures at present levels).   Before the recession started near the end of the Bush administration the unemployment figure was about 4%, but it will be many years before we can get near that number again.   Many economists are predicting it will be 2015 before the unemployment number dips below 6%.   I think even that may be wishful thinking.

The government, thanks to the Republicans returning to power, is in the process of continuing the same old trickle down economics that got us into this recession in the first place -- and that is further widening the gap between the richest Americans and everyone else.   A truly healthy economy won't return until this is fixed, and right now nothing is being done to fix it.   Those expecting an economic rebound in 2011 are just daydreaming.