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Speaker 1: This is Bloomberg surveillance. We need to figure out a

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Speaker 1: better way to get people into work. I think more

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Speaker 1: flexible workplaces, child's care, investments in infrastructure. I think what's

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Speaker 1: happening is people realize you better be doing hiring now

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Speaker 1: because you may have a tougher time down the road.

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Speaker 1: But wage growth continues to pick up as I expect

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Speaker 1: it will. That's going to be increasingly uncomfortable having race

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Speaker 1: close to zero. Bloomberg Surveillance your link to the world

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Speaker 1: of economics, finance, and investment on Bloomberg Radio. Good morning everyone,

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Speaker 1: Michael McKee and Tom Keene's Jobs. Hey, we welcome you

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Speaker 1: worldwide and across this nation. As we moved to thirty minutes,

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Speaker 1: make a twenty nine minutes from now to a job's report.

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Speaker 1: It is one of the most interesting moments for the

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Speaker 1: American labor economy. Bill Gross to join us later in

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Speaker 1: the hour, and we're first honored to bring you James

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Speaker 1: Glassman of JP Morgan, and we'll go to the heart

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Speaker 1: of his decades of research on prime age America. This

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Speaker 1: is the place to discover the nuances and the inequalities

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Speaker 1: of our American labor economy. As always Bloomberg Surveillance brought

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Speaker 1: to by Cone Resnick, a counting tax advisory. Cone Resnick

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Speaker 1: will provide your business with the industry insight it needs

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Speaker 1: to succeed in the dynamic economy. Sign up for insights

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Speaker 1: and find out how at cone Resnick dot com. C

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Speaker 1: O h N R E Z N I c K

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Speaker 1: and on this job today we thank cone Resnick for

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Speaker 1: their daily support of what Michael and I do. Michael,

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Speaker 1: that was a pretty good hour there with the Mr

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Speaker 1: Bowder of City Group and Mr Krueger of a college

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Speaker 1: in New Jersey. I was thinking that we need to

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Speaker 1: be like hockey or basketball or something. We need overtime.

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Speaker 1: We need three overtimes, like right, Jim glass froom with

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Speaker 1: us and Jim. I think a lot of people don't

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Speaker 1: know that all of our guests have a nuance. They

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Speaker 1: have a part of economics where they're worldwide acclaimed. Your

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Speaker 1: decades of work is in prime age in younger Americans.

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Speaker 1: You are the expert in what our kids are doing

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Speaker 1: or not doing. Where is that year old right now

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Speaker 1: that was an owner of some um so here? So

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Speaker 1: here's the here's the point. Everybody's mystified by why the

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Speaker 1: labor market. Unemployment came down so quickly in the early

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Speaker 1: years of the recovery. Well, if you look closely, what

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Speaker 1: you saw was an awful lot of young adults twenties

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Speaker 1: and thirty year olds just banished. Where did they go, Well,

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Speaker 1: they have unemployment insurance, called parents, a lot of them

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Speaker 1: went back to school and um. But now now you're looking,

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Speaker 1: so everything looked like it was really getting really good

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Speaker 1: from an unemployment point of view. But you had three

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Speaker 1: million young people in their twenties and thirties dropping out,

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Speaker 1: going to do something else. They're all starting to come back.

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Speaker 1: And by the way, there's about two and a half

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Speaker 1: million people who are still in their twenty age bracket

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Speaker 1: primate prime working years who who disappeared, and they are

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Speaker 1: now starting to come back in. And that tells you

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Speaker 1: that's where this pool of hitting unemployment has been. And

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Speaker 1: this is why we're starting we're seeing good job trends,

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Speaker 1: even though you think, have we seen that before? Did

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Speaker 1: we after the crash, after the snow Never? Never before?

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Speaker 1: I saw a hint of this in two thousand and one.

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Speaker 1: In two thousand one, if you remember the telecom bust,

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Speaker 1: a lot of kids were getting offers from school. They

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Speaker 1: thought they were going to the job, and then the

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Speaker 1: company pulled the offer. We saw that for a brief moment,

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Speaker 1: for about six months that all happened, and it seems

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Speaker 1: like young people were getting hit and more than more

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Speaker 1: than normal. But we've never seen anything quite like this,

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Speaker 1: and I think, you know, maybe it speaks to the

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Speaker 1: flexibility young people have, but it's also speaks to the

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Speaker 1: realization that everybody has that you need more of a

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Speaker 1: college degree to do to get a really good job

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Speaker 1: and to do well. So it was a good time,

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Speaker 1: you know, if you have some help, it's it's it's

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Speaker 1: helpful for young people to go back and get some

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Speaker 1: specialized skill. And I think they'll be I think they'll

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Speaker 1: be glad they did that. But this is all began

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Speaker 1: to change and one of the reason the labor force

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Speaker 1: is starting to pick up again. We're seeing the participation

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Speaker 1: rate for by age shows that things are coming back,

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Speaker 1: and that tells you this two and a half million

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Speaker 1: people who are still out there are probably coming back

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Speaker 1: in as the job market gets better. Well, that was

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Speaker 1: the discussion we were just having with Alan Krueger. He says,

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Speaker 1: we're not necessarily seeing that yet what we're seeing is

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Speaker 1: people who are unemployed staying in the labor force longer,

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Speaker 1: not dropping out of the labor force because they do

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Speaker 1: think at this point that maybe there's a better chance

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Speaker 1: they'll get hired sooner. Well, I look at the participation

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Speaker 1: rate of by age to see what's going on, and

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Speaker 1: at all ages there it's beginning to come back to

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Speaker 1: drop sharply in two thousands, eight and nine. So I

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Speaker 1: think that tells you there's a mix of both going on,

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Speaker 1: and and the fact that only recently, in the last

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Speaker 1: six months, we're starting to see some real movement in

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Speaker 1: people returning. I mean, if you're twenty eight years old,

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Speaker 1: you didn't find a way to go to retirement, you

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Speaker 1: know that if this person has disappeared, are gonna be

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Speaker 1: coming back, And they'll come back when they're finished with

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Speaker 1: their schooling or when they see something in the job

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Speaker 1: market going on. And and by the way, probably the

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Speaker 1: best way to figure out where we are in this

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Speaker 1: process is to look at the employment to population ratio

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Speaker 1: for five year olds. It's not that five and fifty

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Speaker 1: five year olds don't count, but when we turn fifty,

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Speaker 1: people start dropping out, they start going to retirement, and

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Speaker 1: so to get away from the there is a demographic

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Speaker 1: thing going on, is people the retired generation, and people

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Speaker 1: start moving towards the retirement, you're getting that employment population

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Speaker 1: ratio not coming back as much as we thought in

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Speaker 1: the old days. But for people when they're twenty or

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Speaker 1: forty five years of age, you got a pretty good

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Speaker 1: idea that they one of job, and they will get

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Speaker 1: a job when they think when it is available, and

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Speaker 1: they'll start looking. So that ratio really tells you where

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Speaker 1: we are. And in my mind, we're about two million

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Speaker 1: away from where we were back in two thousand and seven.

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Speaker 1: So that kind of tells me the job market is

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Speaker 1: still kind of in the seventh inning of a full everath.

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Speaker 1: Well it made me, But the question is does the

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Speaker 1: game get rained out? Um? I personally, I think it's

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Speaker 1: gonna be extra innings. That's that's why to me, this

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Speaker 1: baseball metaphor is useful because just because you're in the

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Speaker 1: ninth thing, he doesn't mean it's over. Um. You, my

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Speaker 1: guess is we've got another couple of years to go

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Speaker 1: before we get fully recovered. And then my guess is

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Speaker 1: we've got another several years at least. So I wouldn't

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Speaker 1: be shocked if we've got we're only halfway through this expansion,

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Speaker 1: and it's probably gonna be one of our longer ones

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Speaker 1: because we don't see the financial balances. We don't see

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Speaker 1: the inflation and balances that would make you think that

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Speaker 1: you're gonna have to start wondering when is the incoming

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Speaker 1: And and frankly, the Fed's position is really a good

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Speaker 1: benchmark for how to think about this. When they're when

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Speaker 1: they're still flooring the gas pedal, and and the economy

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Speaker 1: looks like it's coming back pretty well, that tells you

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Speaker 1: we're not really there yet. We've got a long way

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Speaker 1: to got lots of good growth, and all these worries

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Speaker 1: about recession don't make don't really make sense to me,

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Speaker 1: because we've never seen a recession pop up out of

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Speaker 1: the blue when you've got center banks all around the

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Speaker 1: world gunning it. Yeah, but we've seen a slowing of

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Speaker 1: the economy in the first quarter where you I don't know, well,

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Speaker 1: I don't know. Let me put let me put this.

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Speaker 1: We've seen the slowing in GDP, and GDP is not

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Speaker 1: necessarily about the economy. GDP about GDP. GDP is a

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Speaker 1: headline that gets reported, but it's very volatile. Profits. Profits

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Speaker 1: are down, that's true. Like contracting. I'm in the c

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Speaker 1: e O S office and I'm seeing the headline. I'm

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Speaker 1: not an economist, I'm not parting it like you are,

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Speaker 1: and I'm seeing my profits go down. Why wouldn't I

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Speaker 1: take a pause? Why wouldn't I maybe set up a

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Speaker 1: situation if everybody does this, that then leads to a

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Speaker 1: self fulfilling prophecy of you know, if you're in the

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Speaker 1: oil sector, certainly that's going on. But the thing is,

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Speaker 1: the things that are causing trouble for people in the

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Speaker 1: oil industry are benefits for a lot of other people.

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Speaker 1: And that's why, you know, you might ask, why would

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Speaker 1: we argue why would we argue against the idea of

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Speaker 1: the things are slowing? Well, because the things that are

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Speaker 1: slowing are are happening because of something that's going on

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Speaker 1: fallowing the energy prices, which is benefiting a lot of people.

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Speaker 1: So in theory it ought to be a wash. We

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Speaker 1: ought to be seeing as many people, if not more,

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Speaker 1: benefiting for every person that's having to cut back. And

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Speaker 1: I think you may be right about the CEO. He

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Speaker 1: may see that news and he said gee, why don't

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Speaker 1: I cut back? That's why I pay attention to what

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Speaker 1: he's doing. And what I see what he's doing is

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Speaker 1: he's not laying off people and he's hiring. And that's

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Speaker 1: to me the best indication of what the CEO really

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Speaker 1: is doing. I get the idea that at the margin,

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Speaker 1: they're hiring some quality jobs and what all of our

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Speaker 1: listeners perceive as quality jobs. The overwhelming message from our

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Speaker 1: listeners is the economist like Jim Glassman or nuts and

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Speaker 1: you've been very good about this, to be honest, and

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Speaker 1: that the quality of the jobs ain't what it used

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Speaker 1: to be. Well, that's true, that's true. And you know,

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Speaker 1: one one simple way to look at this is just

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Speaker 1: to look at what do the job trends look like

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Speaker 1: by pay level? And what what you know and what

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Speaker 1: you can tell is that people who are earning lower pay,

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Speaker 1: there's more and more people in those brackets. There's also

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Speaker 1: more and more people in the very top brackets that

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Speaker 1: are doing well. It's that middle crowd, the manufacturing jobs

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Speaker 1: that have gotten squeezed, and where are those people going.

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Speaker 1: Most likely they're taking a job that's lower paced. So

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Speaker 1: there's no doubt greater middle pad which is part of

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Speaker 1: that Sanders Trump nexus. Yeah, but you know a lot

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Speaker 1: of uncertainty is that the nature of the job has changed. Um,

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Speaker 1: the the things are changing very rapidly. You have to

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Speaker 1: be a bit more shavvy with technology. Um, we have

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Speaker 1: more flexibility if you're an uber driver. They love the

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Speaker 1: jobs because it gives them flexibility. But the job is

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Speaker 1: not as secure, and I think, I think it's not benefited.

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Speaker 1: It's not forty two hours a week. You're not doing

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Speaker 1: bowling on Thursday nights. That's from another time and place. Yeah,

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Speaker 1: that's right, I mean, and and the nature of the

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Speaker 1: job is really changed a lot. And if you're an

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Speaker 1: er guy, you're doing it fourteen hours a day and

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Speaker 1: if you're done, you're not exhausted. You go do a

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Speaker 1: second job. Well, most of them do have have other

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Speaker 1: jobs and they fill in the extra gap. Um, it's

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Speaker 1: to help him make the car payment. But yeah, it's

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Speaker 1: a whole different the sharing economy. Really. It's got pluses

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Speaker 1: and minuses, but it's a different. I will say this

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Speaker 1: to our national audience. I'm as guilty of this. Mike mckie'

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Speaker 1: is less guilty of this than me. We are totally

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Speaker 1: fixated by living within three zip codes of New York City.

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Speaker 1: We don't have a clue, Mike, what's going on out

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Speaker 1: there in the rest of the world. And I'm as

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Speaker 1: guilty of it and Jim Glass and we have to

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Speaker 1: come back, Jim, Jim glassin with us, will come back

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Speaker 1: and after this discussion of the quality of jobs, look

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Speaker 1: at maybe the quality of the job's report at eight thirty.

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Speaker 1: We'll go beneath the headline data here in twenty minutes

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Speaker 1: Jim Glass, whom will give us immediate and wonderful perspective,

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Speaker 1: and then a conversation with Bill Gross on fed and

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Speaker 1: bond market ramifications. Futures right now negative five rates in

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Speaker 1: all right, let's check in with Michael Barr and get

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Speaker 1: the latest world in national headlines. Mike, Tom, thank you

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Speaker 1: very much. The lead superPAC backing Democratic Hill Ree Clinton

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Speaker 1: is planning to unleash an ad campaign against Donald Trump.

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Speaker 1: Priorities USA has already reserved ninety one million dollars in

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Speaker 1: television ads and will start next month and continue through

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Speaker 1: election day. For the second straight month, space x has

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Speaker 1: landed a rocket on an ocean platform. This morning's successful

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Speaker 1: mission had a first stage booster touching down vertically on

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Speaker 1: a barge in the Atlantic. The same thing occurred April

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Speaker 1: eight during a space station supply run for NASA. The

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Speaker 1: Labor Party's City Khan is in the lead for now

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Speaker 1: to be the next mayor of London. Almost six of

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Speaker 1: the vote so far has been certified. Cohn designed, of course,

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Speaker 1: to beat the Conservatives. Zac Goldsmith Global News twenty four

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Speaker 1: In Today the ten ye yield one point seven thirty

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Speaker 1: bond in the two point five nine percent on Job's Day,

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Speaker 1: James Glassman Bill Stay with Us. Bloomberg Surveillance. The news

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Speaker 1: Good morning, I'm John Tucker. Let's go over to the

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Speaker 1: first word breaking newsdesk for today's morning call, and here's

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Speaker 1: Bill maulone a Morningville, Good morning John. Losses in the

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Speaker 1: US features and they had two percent declines in Shanghai

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Speaker 1: overnight and weakness in Europe. Doubt if you just currently

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Speaker 1: lower by twenty seven points has to be dropped four

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Speaker 1: and NASAK futures declined by seven US ten yel at

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Speaker 1: one point seven four per cent. On the use economic front,

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Speaker 1: those job numbers at eight thirty changeing on farm Peril's

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Speaker 1: estimate two hunch Housing unemployment rate estimate four point nine

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Speaker 1: per cent. After the bellas Night activision boosted year outlook,

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Speaker 1: end international cut year views, Wind CEO says Macau and

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Speaker 1: Las Vegas had better April results, and herb Life said

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Speaker 1: talks with the FTC have progressed to advance stage regard

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Speaker 1: the earnings. This morning, cognizancies q GPS below estimates and

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Speaker 1: Signa raised EPs views and deal news. Evoni buys performance

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Speaker 1: chills unit from air Products for three point eight billion,

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Speaker 1: and City Group says Metivation potential take out range sixty

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Speaker 1: eight to seventy eight a share. Finally, some of your

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Speaker 1: wallsheet upgrades and downgrades over at Goldman Sachs. Advanced Auto

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Speaker 1: Parts raised by Michael's, Cutch Neutral, United Rentals and Zoettas

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Speaker 1: cut to sell and to international. Cutch under perform at

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Speaker 1: Mizoo Ho General Motors raised to equate at Morgan Stanley

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Speaker 1: and Weatherford cut to market perform over at Wells Fargo.

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Speaker 1: Live from the first Breaking News desk on Bill Maloney, John,

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Speaker 1: all right, thanks to Bill and we here live breaking

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Speaker 1: news over your Bloomberg type squawk go on your term. Well,

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Speaker 1: that is a Bloomberg business flash, Tom, Mike, John Tucker,

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Speaker 1: thanks so much. Bloomberg Surveillance is jobs. They brought you

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Speaker 1: investco dot com slash high conviction. Jim Blastman with us

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Speaker 1: is we're eleven minutes away from the job numhere, let

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Speaker 1: me go right to wages. I think it's just so

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Speaker 1: important here. Do we measure average hourly earnings correctly? Or

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Speaker 1: is it a blue collar measurement from another time and place? Well,

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Speaker 1: it is the blue collar measurement. But also what's happened

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Speaker 1: is more and more pay is coming in the form

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Speaker 1: of healthcare, insurance costs and time off and things like that.

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Speaker 1: And if you look at if you look at the

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Speaker 1: trends and pay more and more pay is coming away

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Speaker 1: from wages and the average are learning is just the

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Speaker 1: basic wage piece of this. But you know, if you

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Speaker 1: look at the cost for companies, what they care about

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Speaker 1: is what is the time off costing me? What is

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Speaker 1: health insurance costing me? And if it goes up, they

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Speaker 1: can't be generous on the ways. Where is it? Where's

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Speaker 1: an overheating of average hourly earnings? If we migrate up

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Speaker 1: to two point four percent, is getting out over three?

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Speaker 1: Should be running more like three or four percent? Yeah,

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Speaker 1: it should be. That's that's more normal. If productivity growth

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Speaker 1: is back to trend, that well, okay, that you just

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Speaker 1: you just sort of stepped on the question I was

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Speaker 1: gonna ask. There's a theory out there that with productivity

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Speaker 1: so low and profits falling, companies are less inclined to

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Speaker 1: pay more. They have to pay a little bit more

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Speaker 1: as the labor market titans, but they don't have to

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Speaker 1: pay the way they used to, or they aren't going

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Speaker 1: to pay the way they used to, so the FED

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Speaker 1: maybe looking for too much out of average hourly earnings.

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Speaker 1: They will companies will be doing whatever it takes to

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Speaker 1: manage costs. But the problem is, if they're hiring now,

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Speaker 1: it's because they anticipate things are going to be doing

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Speaker 1: better and they have staffing needs. You can't produce the

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Speaker 1: work until you have the people. So I don't believe

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Speaker 1: the productivity numbers myself. I think that we're in the

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Speaker 1: in the middle of a period. There's lots of things

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Speaker 1: going on here that are distorting the productivity numbers, and

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Speaker 1: I think at the end of the day, we're people

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Speaker 1: are gonna companies are gonna pay people what they're generating.

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Speaker 1: Like the chart that I've been using, it maybe my

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Speaker 1: chart of the year, the presidential moving average of productivity.

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Speaker 1: What we can say is what where we are right

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Speaker 1: now is very unusual. There's only one point in the

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Speaker 1: early nineties where we got here. Yeah, and that raises

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Speaker 1: lots of questions about measurement of GDP. For one thing,

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Speaker 1: A lot of people are starting to question that. If

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Speaker 1: you think about it, there's been a lot of changes

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Speaker 1: going on in the last couple of years that we

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Speaker 1: think are not getting picked up in GDP. We're living

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Speaker 1: in a time when firms are hiring aggressively because they

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Speaker 1: need to get ahead of their staffing needs. You tend

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Speaker 1: to see productivity really weak when that happens. So I

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Speaker 1: think the jury is out. I mean, productivity is something

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Speaker 1: you learn over a course of a decade. What about

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Speaker 1: it folds into it? Uh. The one other major indicator

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Speaker 1: that we report as part of the doves numbers, and

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Speaker 1: that's the uh average weekly hours um at this point

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Speaker 1: expected to go up. I had somebody come up to

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Speaker 1: me today and say, hey, I never thought about that.

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Speaker 1: If if, if hours go up, that means people are

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Speaker 1: making more money. And uh, yeah, And you know, there's

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Speaker 1: a lot of people who work in part time involuntarily.

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Speaker 1: So when they're when they're put back on full schedules,

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Speaker 1: they're hours go up, but they're already counted as employment,

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Speaker 1: so they don't show up in the payball numbers, but

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Speaker 1: they do boost the hours. Are they shifting from part

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Speaker 1: time to full time? It looks like that's that's improving

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Speaker 1: steadily since since the worst we had about nine million

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Speaker 1: people put on part time involuntarily back in the recession.

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Speaker 1: It's come down to about six millions, So it's on

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Speaker 1: the right trajectory, but there's still ways to go. Where

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Speaker 1: should it be more like four million people roughly? Which

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Speaker 1: is the word likes that's hitting up. That's underemployment that

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Speaker 1: is not reflected in the official unemployment because if I'm

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Speaker 1: part time, I'm counted as employeed. That's the problem. I'm

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Speaker 1: part time, so that one So um, there are people

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Speaker 1: I'll there. We will not name names who think the

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Speaker 1: unemployment rate is a sham and that there is much

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Speaker 1: higher than it actually is. Uh, do we measure employment correctly?

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Speaker 1: It would measure it is useful, measure right for what

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Speaker 1: it what it is. But just keep in mind that

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Speaker 1: all these changes are going on the job market, with

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Speaker 1: people pulling out when there aren't opportunities and coming back in.

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Speaker 1: It distorts the picture a little. So I focus a

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Speaker 1: lot on the unemployment that's not measured, which is the

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Speaker 1: part timers and the young people who dropped out and

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Speaker 1: they don't show up anywhere, and if you if you

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Speaker 1: bring them into the picture unemployment, it's more like seven

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Speaker 1: percent or so. The way if on an apples to

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Speaker 1: apples basis with how we normally think of it um.

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Speaker 1: All the other metrics are. They're useful, but but they're

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Speaker 1: all going in the same direction. They're all coming down.

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Speaker 1: But what you you gotta be careful when you take

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Speaker 1: when you look at unemployments, because you can't take them

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Speaker 1: at face value because there's been a lot of changes

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Speaker 1: and there's a lot of unemployment that's kind of masked.

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Speaker 1: We don't see it because has it disappeared from the

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Speaker 1: from the job. From the view of the BLS, this

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Speaker 1: is a tree. We go from Bouder and Krueger to

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Speaker 1: James Glassman of JP Morgan, and then we will go

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Speaker 1: onto Mr gross after Glassman gives us his important instant

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Speaker 1: analysis of what we see. How do we do that?

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Speaker 1: We do that off the Bloomberg. Let's be blunt, Mike,

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Speaker 1: we don't do this. A team of people do this

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Speaker 1: with their headline team Alec Tansy and our statistics team

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Speaker 1: help out. It's literally twenty five people that help us

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Speaker 1: at eight thirty bring this to you. And then we

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Speaker 1: get down to the lowly ability for me, Mike to

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Speaker 1: hit the print button correctly on the keyboard to give

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Speaker 1: Jim Glassman the eight pages from the Bureau of Labor statistics.

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Speaker 1: That's how we know that productivity has there. It is.

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Speaker 1: It is job today. Jim Glassman and Bill Gross with

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Speaker 1: us what you need to know. Yields are in this morning,

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Speaker 1: the two year yield point seven three zero zero John's Day.

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Speaker 1: Bloomberg surveillance coming up with all due respect, highlight brought

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Speaker 1: to you by the Landrover. If it's in your nature

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