A Discouraging Picture

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr.

Another weak jobs report has been released, with data on the September labor market. The report is late because of the shutdown â€" since when is jobs day a Tuesday? Weird! â€" but it shows that payrolls were up a scant 148,000 last month, though the unemployment rate ticked down a touch, to 7.2 percent from 7.3 percent (and not because people left the job market, which is why the jobless rate fell in earlier months).

And remember, this report doesn’t count the impact of all those furloughed government employees and other shutdown-related negative impacts from the first half of this month.

The monthly jobs data are notoriously noisy, so let’s take advantage of the fact that we now have data for the first three quarters of the year. We can thus smooth out the bips and bops of monthly changes over three months. That leads to the picture below, showing average monthly payroll gains over each quarter of the year for both the total job market and the private sector.

Source: Bureau of Labor Statistics, author’s calculations

It’s just a very discouraging picture. Over the most recent quarter, payrolls were up an average of 143,000 per month, down from 182,000 in the second quarter, and 207,000 in the first quarter.

Private payrolls expanded by only 129,000 a month on average last quarter, well down from the average monthly gain of 212,000 (itself just a moderate pace of employment growth) in the first quarter of the year.

It’s possible that employers were exercising some caution in hiring decisions based on their suspicions that a government shutdown was imminent. But I doubt it. The pattern of deceleration seems to me a lot more consistent with same weak demand story that’s been plaguing this disappointing recovery for years.

What’s that? We’re in a recovery? Yes, and have been so for four years. But you just don’t see enough of it in the job market. Unemployment is still highly elevated, and job growth is once again decelerating.

Yes, financial institutions have been turning handsome profits â€" that growth has to be going somewhere (note that stocks opened higher Tuesday, based on the likely correct notion that the Fed would continue to put off the taper) â€" but paychecks are barely beating (low) inflation.

When so much economic inequality is built into the structure of our economy, that’s exactly the result we should expect when the job market is weak. There’s simply no bargaining power that would enable working people to claim their fair share of the growth.

There’s absolutely no question in my mind that fiscal drag and general political dysfunction are hurting working families. The fact of decelerating payrolls this year is another compelling piece of evidence for that case.