Sit and Spin

Today, we learned that 112,000 jobs were created in June, a tenth straight month of job gains. Not only that, the work-week got shorter. There were no signs of “wage inflation,” meaning Greenspan can theoretically take it easy on the rate hikes everyone who pays attention has known were coming. The Unemployment rate was flat. Great news, huh?

No, not really.

First, the economists thought the number would be more like 250,000. Second, on average we needed 150,000-200,000 new jobs each month to stay “even.” Third, June is the month when the economy gets a huge influx of job seekers who just graduated High School or College. Those young people do not count as unemployed because they were never employed in the first place. Add to that the fact that things have gotten just good enough that some “discouraged workers” are starting to think about looking for work again. Depending on when these people were last employed, these people may or may not count in the unemployment rate.

As for the work week dropping to 33.6 hours on average, that means a lot of people are working part time — and therefore have no benefits. This notion is further supported by the fact that HMOs are concerned about growth going forward. This explains why one in five adults did not have health insurance last year. Or, if you prefer to think of it this way, 46.3 million people. Not to alarm any Baby Boomers, but a job that doesn’t provide health insurance probably doesn’t have a retirement plan either.

And finally, there is no “wage inflation” because jobs are being created fastest in low-wage categories. Furthermore, Greenspan would not be raising interest rates if there were not inflation — the normal kind of inflation that means milk, gas, and blue jeans cost more this year than they did last year. So wages are not going up, while the cost of everything else is. Oh, and there are some who make a credible argument that the Bush Administration is allowing inflation to occur so as to pump up future tax revenues and thereby reduce the deficit. I guess they think that’s easier than making Bill Clinton pay more taxes.

Happy Independence Day this Fourth of July. Remember, the FBI would like you to “stay vigilant.”