In the worst downturn since the Great Depression, losing just 539,000 jobs in a month may seem like good news, but there is less cause for optimism than most reporters recognized. First, most reports did note the one-time event of 62,000 people being hired for the 2010 Census. The Census will be employing part-time workers for much of the next year, but this hiring will not be repeated (or at least not at this rate) in future months. So, the net of Census job loss was 601,000. This is still an improvement over the 680,000 average job loss for the prior five months. However, this comparison ignores the fact that we are comparing revised data from the prior five months with unrevised data for April. The revisions for the last five months have all been negative in a big way, adding an average of 86,000 to reported job loss. We don't know whether the revisions will be that large again in April, or even that they will be negative, but a word of caution is certainly in order. Second, It is worth noting that the number of jobs imputed for new firms not included in the Labor Department's survey continues to outpace the number for 2008. There were 226,000 jobs imputed for new firms in April of 2009 compared with just 176,000 for April of 2008. Given the health of the economy in 2009 compared with 2008, this seems unlikely. Third, wage growth appears to have collapsed with the average hourly wage reportedly increasing by less than 0.1 percent in the April data. This is consistent with a sharp slowing of the rate of wage growth reported in the Employment Cost Index for the first quarter. This is very disturbing. Wage growth had been holding up earlier in the downturn, which meant that workers (at least those who still had jobs) were seeing increased purchasing power and were therefore able to sustain their consumption. It now seems that weakness in the labor market has brought wage growth to a halt. This is likely to further reduce consumption and demand more generally. In short, while we can always say that this report could have been worse, there was not much to celebrate here.
--Dean Baker
