Chart of the Day: That “WOW” Job Report Reveals a Disturbing Trend of Socialism

In case you missed it, there was a loud gasp from Wall Street strategists and economists after the last Friday’s jobs report (2023-02-03), with the reactions of “wow, wow, wow.” See below CNBC’s Rick Santeli read the headline in disbelief.

The February 2023 “wow” jobs report showed the unemployment rate plunged to 3.4% – matching the lowest in 54 years – from 3.6%, while the payrolls report showed the addition of 517K jobs, the highest since July and far above the highest forecast. Below is the breakdown, and learn more here.

Why was everyone so wrong and surprised? The BLS unveiled a slew of data revisions, which include updating the population controls – which would have the mechanical effect of boosting the labor force – and updating seasonal factors, which further distorted the January nonfarm payroll number – see here. Yes, in other words, they are cooking the books. All, of course, to get more transparency in our economic data – learn more here. You can see the effects of these data revisions in the chart below.

Other items in this February 2023 jobs report that are not so positive are the labor participation rate which is still way below pre-Covid levels, and the full vs. part-time employment trend is problematic. See these items in the chart below.

But there is something more fundamental going on in the US economy and in many Western economies. We pointed out back in mid-2022 that this coming recession may not come with gut-wrenching job losses – see here. Instead, job losses will be socialized over the entire labor force.

In typical business cycle recessions, unemployment will rise sharply and recover in four to eight quarters – where wages also return to previous levels. In this recession, instead of workers losing their jobs, the losses are being socialized over the entire labor force with wage compression and lower real wages. This has been accomplished by the efforts of central bankers via currency debasement – i.e., the 40-year high inflation rates.

An example of the compression of wage dispersions between classes of workers has become a trend. The supervisory class,whicht usually have better wages, is rising slower relative to the non-supervisory roles in business. See this in the chart below and learn more here.

Some may think this wage compression between supervisor and non-supervisory roles is good. If the dispersion is too excessive, perhaps. But if not, it will destroy any merit-based wage growth leading to workers unwilling to take responsibility roles and hence could hurt overall productivity – the key determinant in improving living standards.

Here is another example of the socialization of the labor force in America. Average hourly earnings for all employees on US private nonfarm payrolls increased by 4.4% from a year earlier in January of 2023, after an upwardly revised 4.8% rise in the prior month and slightly above market estimates of 4.3%. It was the smallest annual growth in average hourly earnings since August 2021. See below a comparison of YoY US Average Hourly Earnings vs. the Core CPI.

What this above chart shows is that American labor wages are not keeping up with inflation – leading to lower standards of living – learn more here about the collapsing wage growth.

Wage compression of work classes and overall real wage decline is leading us to the socialization of the American workforce. It will have real effects on every American – though you may have a job, your standard of living will change to the point it will force changes in your life – “You will own nothing, and you will be happy.”

See more Chart of the Day posts.

By Tom Williams

Read Original Article on RightWireReport.com