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Last week the White House and some in the press reported how a 165,000 employment increase in April was proof the economy is improving very well.  However this good news was good for a bad reason.

The headline employment (full time plus part time) increase was 165,000, but this was done by a 107,000 decline in full time employment with an increase in part time employment by 258,000.

But it gets worse.

The total number of private sector hours worked per week declined (average weekly hours times total employment).  Which means the total demand for labor fell - this should not be happening in a recovery.  

This decline was large enough to decease the average number of hours worked by 0.2 hours to 34.6.  In addition, hourly compensation increased by 4 cents to $23.87.  So the net total compensation paid actually decreased.  This is not what should be happening in a recovery.

We may be seeing employers shifting full time workers to part time due to terrible incentives from the Affordable Care Act as the employment baseline is established starting in July.

We may be entering a time where BLS reports increasing employment that superficially looks positive caused by employers replacing the work of two full-time employees with three part-time employees.


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