Visitor publish by Ed Butowsky
The U.S. Bureau of Labor Statistics launched its month-to-month Employment Situation Summary on Friday, Sept 3 at 8:30 a.m. Japanese Time. Right here’s the first paragraph, with a little bit of enhancing on my half:
Complete nonfarm payroll employment rose by 235,000 in August, and the unemployment charge declined by 0.2 share level to five.2 %, the U.S. Bureau of Labor Statistics reported as we speak. Up to now this 12 months, month-to-month job progress has averaged 586,000. In August, notable job good points occurred in skilled and enterprise providers, transportation and warehousing, non-public schooling, manufacturing, and different providers. Employment in retail commerce declined over the month.
So as soon as once more, the month-to-month “Job Report” got here out and the media did what the media all the time does: Regurgitate the press launch and recite the numbers – the usual blah blah blah – with out offering a lot as a shred of context. Some know-nothing “experts” predicted plenty of 720,000, so the media dutifully reported that the variety of new jobs missed attributable to Covid 19. So general GOOD NEWS!!!
That’s the way it goes as of late in terms of financial information. The speaking heads don’t perceive any of it, so they only say the economic system added blah blah blah jobs, and we the individuals nod our heads in approval. Jobs up, HOORAY! That’s all we have to know.
Nicely, not likely all. Let’s dig somewhat deeper. Let’s put the “good” information into a framework that helps us perceive what all of it means.
Now listen, as a result of right here’s the key level you’ll want to learn about the month-to-month jobs report, the one the media doesn’t inform you, as a result of it doesn’t get it:
America’s annual deficit – $3.1 trillion this 12 months, give or take a few billion – is bleeding uncontrollably. And it’s the annual deficit – not the “experts” and never the speaking heads – that dictates what number of jobs the nation wants so as to add every month.
Learn that over a number of instances and preserve it in thoughts, as a result of now we’re going to determine what number of new full-time jobs we actually want to beat the deficit. And you may put away your calculator. It’s fairly straightforward arithmetic.
Initially, you’ll want to know that half of America’s tax income – the cash the nation wants to remain afloat – comes from federal revenue taxes. So to beat the deficit, irrespective of its measurement, we have to gather half our new cash from the federal revenue taxes that will probably be paid by individuals who weren’t contributing earlier than: the individuals in new jobs.
- America’s deficit stands at $3.1 trillion this 12 months. Since half of the cash we have to eradicate that should come from federal revenue taxes derived from new jobs …
- Which means we’d like $1.55 trillion from federal revenue taxes.
And we are able to’t come even near that, as a result of:
- The typical full-time job pays $50,000.
- At a 25 % federal revenue tax charge, every new full-time job will put $12,500 – one-quarter of $50,000 – into America’s checking account.
Let’s recap shortly: We want $1.55 trillion (half the $3.1 trillion deficit) in new revenue tax funds, and we’ll be accumulating $12,500 from every new job.
Now, let’s do the math …
$1.55 trillion ÷ $12,500 = 124 million
Which means we have to add 124 million new jobs this 12 months to beat the deficit. However there’s no have to panic as a result of that’s 124 million in a 12 months. The month-to-month determine is far decrease:
124 million ÷ 12 = 10,333,333
OK, now you’ll be able to panic. The formulation establishes that we have to common 10.33 million new jobs monthly to offset the half of the $3.1 trillion deficit that should be raised via revenue taxes.
No downside, besides we’ve been averaging solely 566,000 new jobs monthly this 12 months – and the 12 months is nearly over. And get this: Half of these jobs are part-time. Which means our 566,000 jobs actually add as much as 283,000. We want so as to add 10,333,333 full-time jobs every month, and we’re really including solely 283,000. That’s simply 3 % of what we’d like to pay our nation’s payments. And if we are able to’t make up the different 97 %, we’ll have so as to add the shortfall to the nationwide debt.
The subsequent jobs report will probably be launched on October 1 at 8:30 a.m. Japanese. When it comes out, you’ll be able to rely on listening to quite a lot of the identical blah blah blah.
Simply don’t imagine it. As a result of this “good” information needs to be seen via a lens that exhibits not solely what number of new jobs have been added, however what number of extra new jobs wanted to be added to offset our spending. We have to cope with the deficit, as a result of failing to take action simply provides to our nationwide debt.