Tags: El-Erian | job | unemployment | work

El-Erian: Jobs Data 'Far From Reassuring'

By    |   Wednesday, 25 September 2013 08:25 AM

Although unemployment has been steadily falling, digging deeper into employment data shows an uneven job recovery, a struggling economy and increasing inequality, according to Mohamed El-Erian, CEO and co-chief investment officer of fund giant Pimco.

Just two numbers in the monthly Bureau of Labor Statistics (BLS) employment report, net monthly job creation and the unemployment rate, get most the attention. The good news is those numbers show a gradually improving economy.

The bad news is that those headline numbers show only a partial view of where we're heading, El-Erian writes in an article for Project Syndicate.

Editor’s Note:
Obama’s Budget Takes Aim at Retired Americans

For an accurate view of what's ahead, we need to look at other BLS numbers. "What these other numbers have to tell us — about both the present and the future — is far from reassuring," he notes.

Take duration of unemployment. In August, 4.3 million Americans were classified as long-term unemployed, or 37.9 percent of the total unemployed.

El-Erian calls that a "worrisome figure," especially since the financial crisis was five years ago. The longer people are out of work, the harder it is for them to find full-time work with decent pay.

And that number doesn't even include discouraged workers who are no longer seeking work, he adds, saying the employment-to-population ratio, now just 58.6 percent, is a more revealing.

"The teenage-unemployment rate is another underappreciated indicator that is at an alarming level," he frets. "At 22.7 percent, too many American teenagers, lacking steady work experience early in their professional careers, risk going from unemployed to unemployable."

In addition, more people are working part time, earnings remain stagnant and many Americans have dropped out of the work force.

Overall, statistics point to a growing burden on the most vulnerable, such as the less educated, first-time workers and the long-term unemployed. The trend will lead to increasing poverty, greater inequality and increasing political polarization.

The BLS figures, El-Erian argues, are "an urgent call" for action.

"A better mix of fiscal and monetary policies and sustained measures to enhance productivity and competitiveness remain necessary conditions for addressing America’s labor-market challenges. But they are not sufficient," he stresses, urging the public and private sectors to pursue labor training programs.

Other experts have been troubled, as well as perplexed, by labor market statistics, such as the low work force participation rate, which some say indicates a worse labor market than the unemployment rate reports.

More people are opting to raise children, return to school or retire early, notes The Wall Street Journal, because current salaries may not be high enough to entice them to work.

"At the margin, people are saying the reward is not worth the effort, and focusing on other things," John Silvia, chief economist at Wells Fargo, tells the Journal.

Editor’s Note: Obama’s Budget Takes Aim at Retired Americans

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Economy
Although unemployment has been steadily falling, digging deeper into employment data shows an uneven job recovery, a struggling economy and increasing inequality, according to Mohamed El-Erian, CEO and co-chief investment officer of fund giant Pimco.
El-Erian,job,unemployment,work
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2013-25-25
Wednesday, 25 September 2013 08:25 AM
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