Saturday, June 11, 2016

How Does One Explain The Lack Of New Jobs Being Reported In The US -- June 11, 2016


June 13, 2016: page 3 of today's Wall Street Journal: in construction industry, labor crunch hits home. Interestingly, almost the same story was published on October 12, 2015. From today's article:
The more than yearlong slump in prices for raw materials used in construction hasn’t been of much benefit for U.S. builders.
The prices of many key ingredients for construction have dropped dramatically over the past year and a half, as falling global demand for commodities has led to steep declines in the cost of asphalt, iron, steel and diesel.
But persistent worker shortages have continued to drive up labor costs for the construction industry, offsetting any savings on materials.
Why: construction workers during last bust, retired or found jobs in other fields; immigration patterns have changed; young workers unskilled, yada, yada, yada.

And yet, projects keep moving along.

Original Post
This has nothing to do with the Bakken. If you came here looking for the Bakken, scroll down or check out the sidebar at the right.

I spent the past week driving our two older granddaughters back and forth to "computer coding camp" at the University of Texas -- Dallas. It is impossible to describe the amount of federal, state, and private highway construction in north Texas. One can only imagine the number of new jobs this is creating.

In addition, it appears every undeveloped acre in the arc swinging from Trophy Club (northwest of DFW) to Plano (northeast of DFW) is showing activity. Everywhere orange netting has been placed to show which trees are not to be cut down; earth is being moved by everything from huge CATs to small Bobcats; pre-fab cement walls are being held up by flying buttresses; and, weekly updates in the local newspapers telling us about recently opened operations.

Everything I'm seeing does not jibe with this employment report for May in which the US government says only 38,000 new jobs were added. I would bet there were that many new jobs added in north Texas alone as the spring/summer construction season got into full swing.

If the economy is doing so incredibly well here in north Texas, and I think, for the most part, in much of the rest of the US -- the GDP Now forecast suggests a growth rate of 2.5% for 2Q16 -- which, although not great, is not shabby.

Another huge phenomenon in north Texas: the number of private landscapers. These are generally F-150 pick-up trucks (or slightly larger trucks) pulling flat-bed trailers loaded with lawn care equipment, some of it pretty impressive. I bet I saw 38,000 F-150 pick-up trucks pulling flat-bed trailers this past week. (Which reminds me, I don't recall seeing any Teslas.)

So, how does one explain a booming economy -- at least in some parts of the country -- and a US jobs report suggesting only 38,000 jobs were added in the month of May (for newbies: a minimum of 200,000 jobs is required to suggest economic growth)?

Somehow American employers are getting the job done. American wealth set new records. (Most of it due to increased home values, of course.) But American employers are getting the job done and doing that by not hiring anyone. LOL.

It's called an underground economy. A couple of dots to connect. The reports are pretty consistent that undocumented men, women, and children are streaming across the border.  On the other hand, we are not seeing reports of local communities collapsing under demands for homeless shelters for these MWCSOTB. I suppose the US government provides support for many of them, but certainly not to extent that would be needed when they first get here. My hunch is that contractors, landscapers, fast-food restaurants, mom-and-pop retail are hiring folks "off the books" to a far greater extent than we are being told.

I have no idea. I have nothing to back that up. But it's what I would say if sitting in the Daily Addiction Coffeeshop in Williston and someone asked. I'm probably wrong.

But what I'm seeing here in north Texas does not jibe with news reports about hiring.

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