Summer Jobs: A Second Look at the June 2004 Payroll Report

The June 2004 jobs report was not what people were expecting.

On July 2, 2004 the Labor Department announced that 112,000 new jobs were created in the month of June and that the unemployment rate stayed steady at 5.6 percent.

Economists had predicted a much larger increase in the number of jobs --250,000 in June.

So what does this mean? Is the job market looking up or slowing down? Well, that all depends on who’s talking. Presidential hopeful John Kerry and other Democrats who are concerned about how many individuals feel secure in their jobs say that the slow job growth is proof that President Bush’s economic policies aren’t working. President Bush, on the other hand, who counts on corporations with profits to create new jobs, says the general economy’s steady growth (although from a low start and still way behind where it was in the last administration) is proof that his policies are working.

Choosing one way of looking at information is a form of spin, if that is all we, the public, know. So, how do we see the jobs report with more information than the persuaders tell us through their spin? Looking at the specifics of the labor market and at how payroll increases relate to data on the rest of the economy is a good way to start.

Reading the jobs report

When the news agencies simply report that the U.S. gained 112,000 new jobs in June, they are leaving out a lot of information.

For example, it’s important to know that the potential work force grew by 305,000 new people in June. That means that there are actually more people looking for work than before, despite the fact that new jobs were created. Since new people are always entering the workforce, the economy has to continually add jobs just to keep the unemployment rate steady.

There are also a lot of people out there who would like to work but aren’t even looking because they’re so discouraged. Add these 478,000 folks to the mix, and you’ve got a lot more people who need jobs.

Historical context

Very recent history, meaning the past few months, makes June’s job report look anemic. An average of 304,000 new jobs were created in March, April, and May, so by comparison, June is weak.

In more distant history, in the Clinton administration, an average of 239,000 jobs were added every month; this contrast makes June’s job situation look dismal as well.

However, the economy has created 1.5 million new jobs total since last August. So, when June’s jobs report is added to the months before, it comes to a substantial jobs gain.

But, we must remember that, overall, 2.7 million jobs were lost at the beginning of Bush’s term, when the country was struggling with recession, with the September 11th terrorist attacks, and with stock market plunges.

This means that 1.2 million jobs are needed for the U.S. to get out of its jobs deficit. The Bush administration is probably hoping that these jobs will be regained quickly, because f they’re not recovered by November, Bush will be the first president since Herbert Hoover in the Great Depression to have lost jobs while in office.

Factors in low job growth

One reason employers aren’t hiring is because they’re spending their money on other things. For example, the recent surge in oil prices caused many companies to pay extra to ship and manufacture their goods, so there was less money left over for hiring. Further, the rising prices of all goods, called inflation, have caused manufacturers to spend more on their raw materials and less on labor.

Some industries, especially clothing, paper, and food manufacturers, received fewer orders in April and May, so they cut (not created) jobs in June.

The general economy

Despite June’s slow job growth, a variety of economic indicators suggest that "the economy" is steadily growing. Many analysts expect that the total market value of goods and services produced, called the gross domestic product or GDP, to grow by 4.6 percent this year, the fastest in two decades. That value of what is produced can be created by machines and by current employees working harder for less pay.

In addition, real, after-tax income is up 11 percent since 2001 and homeownership is at a record high. Consumers, that is those who have jobs and money, are also more confident in the economy and so are buying more items and bigger-ticket items, a trend that boosts the economy as well.

The economic puzzle

No single economic factor, like the June 2004 jobs report, gives an accurate picture of the economy. Rather, it is one piece in the economic puzzle. Both Democrats and Republicans have tried to use the jobs report as proof of their claims, but no single economic indicator can be used alone as proof. When July’s job report comes out, remember to ask, what’s going on in manufacturing? How does consumer spending contribute? How many people joined the workforce in July? What’s the unemployment rate? How does this figure compare with last month, and the months before?

An informed public prevents spin. For more information on jobs, taxes, and benefits, click here. To discuss this issue with other WomenMatter readers, join one of our online forums.

You can also sign up for an e alert, and we’ll keep you posted. Inform yourself on this and other issues, then register to vote and contact your representatives, because your voice matters.

WomenMatter is dedicated to empowering women to participate in the political process. To make a donation, click here.

Article Posted on: 7/13/2004