Monday, February 10, 2014

Employment Trends (excerpt)

I’ve noticed recently at my local CVS Pharmacy that there are three cash registers but only one person operating one of them. The other day, I was surprised when this person offered to help me to check out using the self-service barcode scanner rather than do it for me at her register. The message is “do it yourself.” This is just one of many examples of how businesses are using technology to reduce their headcount.

This is one of the main reasons why employment gains have been subpar during the current economic expansion. Friday’s employment report for January, which included benchmark revisions, didn’t alter this picture. There are lots of numbers in this report and, once again, they were all over the place with some surprisingly strong and others surprisingly weak.

Once again, I cut through all the noise by calculating our YRI Earned Income Proxy, which is simply aggregate hours worked times average hourly earnings in the private sector. It is highly correlated with both wages and salaries in the private sector and retail sales. It rose 0.3% during January to yet another new record high.

In addition, there are five employment measures that we monitor to keep us confused. They certainly did their job in January: Payroll employment (up 113,000), private payrolls (142,000), household employment (638,000), household measure comparable to payroll measure (901,000!), and the ADP measure of private payrolls (175,000). Our assessment is that the labor market continues to improve at a subpar pace. Private payrolls are finally back, matching the record high during January 2008.

And knowledge workers are putting knowledge workers out of work too. Payroll employment in all information industries peaked at a record 3.7 million during March 2001. It dropped to 2.7 million during mid-2010, and has remained around that level since then.

Today's Morning Briefing: Man vs. Machine. (1) Virtuous cycles now and then. (2) Golden Ages. (3) Professor Gordon is pessimistic. (4) “The Second Machine Age” is here. (5) Bounty vs. spread. (6) Machines replacing routine workers. (7) The job of knowledge workers is to eliminate jobs. (8) Productivity outpacing real wages and employment. (9) Do it yourself. (10) YRI Earned Income Proxy at record high. (11) Yellen’s testimony. (12) Stock picking is making a comeback. (13) “Alone at Sea” (+). (More for subscribers.)

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