Tags: Lazear | jobs | employment | hours

Former Bush Economist Lazear: Jobs Numbers Have 'Hidden Rot'

By    |   Monday, 17 March 2014 12:54 PM

Unemployment has fallen to 6.7 percent, as the economy created 175,000 new jobs in February. Wonderful.

Not so, says Stanford University business professor Edward Lazear. The jobs picture is actually quite bad, and the net number of jobs has falling.

The problem is the number of hours Americans worked dropped, points out Lazear, a former chairman of the president's Council of Economic Advisers, in an opinion piece for The Wall Street Journal.

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The average workweek fell from 34.5 hours from September to 34.2 hours in February. Combined with slow job creation, that indicates that total hours of employment dropped.

Although employers added 900,000 jobs since September, the shorter workweek is like losing a million jobs. In other words, it's equal to losing 100,000 jobs.

"The recent decline is cause for concern," he states. "It gives us a more accurate but dismal picture of the past two quarters."

When taking into account hours worked, employment fell in four of the last six months and more than a third of the months in the past two years.

The number of total hours worked is a better economic measure than number of people employed, he argues. "An employer who replaces 100 40-hour-per-week workers with 120 20-hour-per-week workers is contracting, not expanding operations. The same is true at the national level."

The drop is too long lasting and significant to be a statistical fluke, Lazear asserts.

Was it the cold winter? The numbers are already seasonally adjusted. The seasonally adjusting may not be perfect, but many parts of the country had mild winter weather. Plus, work hours were already falling before cold temperatures arrived, he explains, pointing to drops in September and October.

Was it the Affordable Care Act? The law requires larger businesses to provide health insurance to employees working more than 30 hours a week. It's not yet clear if businesses reduced hours to avoid providing health insurance.

Naomi Lopez Bauman, Illinois Policy Institute's director of health policy, blames Obamacare for the drop in work hours. The average workweek was steady in Illinois, even following the financial crisis, but fell dramatically in the retail trade, food and beverage, and general merchandise sectors after the law was enacted, she writes in an article for Forbes.

"Illinois is far from a unique example. This disturbing trend is becoming more apparent nationally, as well."

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The jobs picture is actually quite bad, and the net number of jobs has falling, says Stanford University business professor Edward Lazear.
Lazear,jobs,employment,hours
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2014-54-17
Monday, 17 March 2014 12:54 PM
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