The U.S. lost more jobs than forecast in September as local governments fired teachers and other workers in response to declining tax revenue.
Payrolls fell by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. Private employers added 64,000 jobs, less than forecast. Wages and the workweek stagnated.
“The private-sector growth is somewhat heartening but in total you have to expect that state and local and government jobs are going to be a drag for a number of months and perhaps a number of quarters,” Bill Gross, co-chief investment officer at Pacific Investment Management Co. in Newport Beach, California, said in a radio interview on “Bloomberg Surveillance” with Tom Keene. He called the report a “strong signal” for further Fed action.
We should expect more Fed action because it's the only thing they know and the economy on Main Street is not improving.
Private jobs up but public jobs down even more. What's not being said, "We are laying off highly paid public union jobs for what are probably lower paying private jobs." That's a net negative.
The big untold story in this report is the continuation of the WAGE DEFLATION trend. Where does a laid off teacher, policeman, or fireman go and find a job that pays anything remotely close to their former paycheck. NOWHERE for the majority. The rude awakening is a smaller income level is at hand.
We will see wage deflation in the public sector first via layoffs and those who eventually find jobs at lower pay scales. Eventually though, cities towns and states will ultimately have to pay public workers less with lower benefits because layoffs are not balancing budgets. This to will be wage deflation.
I've read there are roughly $20 million muni workers in this country. That's a mighty big population to experience layoffs and wage deflation. Over time it's a big net negative for the economy. Should it happen? Absolutely, we are bankrupting municipalities, but it's still a net negative and really the most important impact from correcting budgets across the land because wage deflation is a key component of deflation.
Hope all is well.
J.D. Rosendahl, Rosey