Some Good News About Jobs. No, Really.

Just ask anyone, from the White House on down. We are currently mired in the jobless-est of all jobless recoveries, and the likely outcome is a return to recession if not pitchforks in the street. The Federal Reserve is so spooked that it announced plans today to create more money out of thin air to buy Treasury bonds. Congress is so scared, it just voted to borrow another $26 billion from the Chinese to fund jobs for U.S. municipal workers. Nobody, it seems, thinks these measures are alarmist. In fact, so many seem so certain that the jobless situation is disastrous that you can't help but ask if they're wrong.

Granted, it's hard to find economists willing to read anything but ruination in the jobs data, but there are two reliable optimists in the dismal science, Ed Yardeni of Yardeni Associates and Jim Paulsen of Wells Capital Management. They don't deny that today's employment situation is awful; but they point out that it's no worse than in other recent recoveries, and those jobless recoveries in due time all became satisfactorily jobful. If you see the data as they do, what's called for is not despair, just patience.

So what do they see?

• The Conference Board's "Jobs Hard to Get" survey is no worse than in other cycles. About 46% of respondents say that jobs are hard to get, which is about the same or lower than its peak in other recoveries of the past 50 years. (The one exception: 2003). Indeed, the Board's Employment Trends Index, which includes the "hard to get" survey, yesterday printed its 14^th consecutive monthly gain. It was smaller than in previous months, but a gain's a gain.
• Falling productivity in the second quarter may set the stage for a hiring spree. Every time a recession turns into recovery, productivity rises. That's because the rebound in revenues is supported by a shrunken workforce. Eventually, though, employers need to hire to support growing business because there's only so much work you can get out of your exhausted layoff survivors. In 2003, Paulsen points out, employment didn't rebound until productivity started to fall. He asks, rhetorically, "Could the second quarter represent a downshift in the pace of productivity gains which, like it has in the last two recessions, also marks the beginning of a healthy period of job creation?" It might.
• While the jobless are having a hard time getting rehired, those who have jobs are being paid better than ever. The New York Times' David Leonhardt notes today that real hourly wages have actually risen 5% since the recession began. "The the contrast is pretty stark. The typical jobless person has been out of work six months. The typical worker has received a raise."
• Private payrolls are rising, not falling. Even though the 71,000-job gain last month in private payrolls was below hopes, Yardeni points out, job gains over the past nine months total 662,000. "This is in the middle of the gains of 1.21mn and 356,000 during the first nine months of the previous two 'jobless' recoveries," he writes.
• People worked longer, even in July. So not only are those with jobs earning more per hour, they're working more hours. That's good, employers can't work the same employees around the clock, even if they pay them more for the privilege. They'll have to hire eventually.

Granted, Yardeni's and Paulsen's rose-colored point of view isn't the consensus at the moment. But when did that ever mean it wasn't right?

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