January Jobs Report Redux

The quantity may be there, but the quality is lacking. Heralding an economic recovery solely based on BLS statistics seems so irresponsible, but the mainstream media is probably incapable of anything else.

Via Zero Hedge:

While the BLS is the best, if massively seasonally adjusted, tracker of job quantity, the only true indicator of job quality is the FMS’s Daily Treasury Statement, which tracks and updates how much government revenue is generated any given day courtesy of withheld income and employment taxes. So to avoid any potential semantic confusion, we will stick to numbers and bullets: hopefully even the most dedicated newsletter sellers and “asset managers” can follow those without losing much in translation.

  • In the fiscal year 2011 and 2012 (starting October 1) and continuing through the date of the most recent BLS update or January 31, there have been 87 official work days. This is the period which we will define as YTD (fiscal year to date period) for 2012, and will use its matched equivalent for 2011 for comparative purposes.
  • In the 2012 YTD period, the US Treasury recorded personal income withholding tax revenue of  $592.676 billion (source)
  • In the comparable period for 2011, beginning October 1, 2010 and continuing through January 31, 2011, withholding taxes were $592.984 billion (source)
  • In other words, the US Treasury collected $310 million more in tax withholdings in the first 4 months of fiscal 2011 than in the first 4 months of fiscal 2012.

Presented visually – the black bar shows the cumulative divergence between the fiscal 2011 and 2012 data series. Below zero, such as that on January 31, is bad.

  • Based on establishment survey data, the US started fiscal year 2011 (Sept 30, 2010) with 129,885,000 employed (source)
  • Based on establishment survey data, the US started fiscal year 2012 (Sept 30, 2011) with 131,694,000 employed (source)
  • Based on establishment survey data, at January 31, 2011, the US had 130,456,000 employed (source)
  • Based on establishment survey data, at January 31, 2012, the US had 132,409,000 employed (source)
  • Said otherwise, in the first 4 months of fiscal 2011 the US “created” 571,000 jobs; in the first 4 months of 2012, the US “created” 715,000 jobs. 
  • More importantly, between January 31, 2011 and January 31, 2012 the US added 1,953,000 jobs.

And yet…

  • Over the same period, as shown above tax withholdings are actually trending lower in 2012 compared to 2011!

But that’s not the kicker. This is:

  • The 130.456MM workers “employed” at January 31, 2011 created a total of $592.985MM in withholdings, or on average of $4,545.48 per worker over the first 4 months of the fiscal year 2011.
  • The 132.409MM workers “employed” at January 31, 2012 created a total of $592.675MM in withholdings, or on average of $4,476.09 per worker over the first 4 months of the fiscal year 2012.

Translationbased on the above, even as America was “creating” jobs, 2 million to be precise (and 2.5 million between Sept 30, 2010 and January 31, 2012), the government tax revenues created by these jobs actually declined in 2012 compared to 2011, on a per job basis, by roughly 1.5%!

Finally, and most, importantly, we hope that this analysis has proven that while the BLS may play around with various numerators, denominators, seasonal adjustments, and other irrelevant gimmicks which are only fit for popular consumption particularly by those who have never used excel in their lives, a deeper analysis confirms our concerns, that not only is America slipping ever further into a state of permanent “temp job” status, but that a “quality analysis” of the jobs created shows that the US job formation machinery is badly hurt, and just like the marginal utility of debt now hitting a critical inflection point, so the “marginal utility” of incremental jobs is now negative, which means that Obama, or whichever administration, can easily represent to be growing jobs, and declining the unemployment rate by whatever gimmick necessary. Yet these very jobs are now generating far less in so very critical tax revenue for the US treasury, and continue to declining steadily in quality.

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