| Sector | Nonfarm Business | Business | Manufacturing | Durable | Nondurable |
|---|---|---|---|---|---|
| Productivity | 0.5 | 2 | 3.5 | 3.6 | 3.9 |
| Output | 2.1 | 3.1 | 5.3 | 6.4 | 4.2 |
| Hours | 1.6 | 1.1 | 1.8 | 2.8 | 0.2 |
| Hourly compensation | -3.8 | -3.1 | -6.9 | -8.1 | -4.9 |
| Real hourly compensation | -5.2 | -4.6 | -8.3 | -9.4 | -6.4 |
| Unit labor costs | -4.3 | -5 | -10 | -11.2 | -8.5 |
Year-Over-Year numbers are still positive but the revised quarterly numbers shown above are an unmitigated disaster.
The BLS notes "Unit labor costs in nonfarm businesses fell 4.3 percent in the first quarter of 2013, the combined effect of a 3.8 percent decrease in hourly compensation and the 0.5 percent increase in productivity. The decline in hourly compensation is the largest in the series, which begins in 1947."
What's Going On?
It's quite easy to explain why this is happening, and it was all too predictable as well. Obamacare and inane Fed policies are in play as noted yesterday in Fed Policies and Obama Programs Exacerbate Credit Crunch to Small Businesses.
The Fed believes that holding interest rates low fosters business growth, hiring, and bank lending?Results In Today
So why isn't that happening? .... by holding interest rates low, the Fed encourages not hiring, but rather corporate investment in software and hardware solutions that enable companies to get rid of workers.
Why hire someone at increasing minimum wages, and increasing costs of medical care, when you can borrow money for next to nothing and invest in solutions that require fewer workers?
What About Obamacare?
Obamacare is a huge part of the jobless recovery problem as well. I have talked about this on numerous occasions. Here is a partial list:
- October 9, 2012: Is Obamacare Responsible for the Surge in Part-Time Jobs?
- October 20, 2012: Mish Obamacare Mailbag: Expect More Part-Time Jobs
- February 2, 2012: Obamacare in Action: Retail Workweek Hits 3-Year Low
- February 19, 2013: Opting Out of Obamacare (the Unaffordable Health Care Act); Not Even Labor Unions Want It
- May 3, 2013: Obamacare Affects Part-Time Employment Yet Again; Nullification Bill Passes South Carolina House; Analysis of Healthcare Penalty Rates
The evidence is now so overwhelming that no one but Obama and the Democrats can deny that Obamacare is responsible for the massive surge in jobs (nearly all of them part-time).
The results are in today. The Fed and Obama are both engaging in counterproductive policies that discourage hiring, especially hiring of full-time employees.
Of course Obama will respond by asking for a raise in minimum wage (giving further incentives to businesses to seek ways to get rid of employees), and the Fed will vow to keep interest rates low (enabling companies to borrow money for next to nothing to do just that).
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
