So let's see that May job creation report . . . er, then again . . .

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Published by: Dan Calabrese on Friday June 03rd, 2016

Only 38,000 new jobs is rancidly awful - the worst in nearly six years.

I guess you could be a sunny-side-up kind of guy. If it's the worst in six years, then everything for the past six years was better. Hurray!

Or you could understand how it really is: Despite the very misleading U3 unemployment rate that owes its gloss to the lowest labor participation rate since 1978, the economy has not been creating new jobs to any serious degree since the 2008 mortgage market meltdown. Any month when we do under 200,000 is a net loss because that's the mere replacement rate necessary to keep up with population growth. So when Obama talks about "10 million new jobs created," it sounds like a lot. But it's not. Over the course of his administration, that represents one of the worst long-term averages in the nation's history - even before you account for the relative size of the population today.

So as bad as Obama's performance in this area has been to date, what we need desperately now is to pick it up, and seriously, and quickly. What we got? Eh . . .

The U.S. economy created the fewest number of jobs in more than five years in May as employment in the manufacturing and construction sectors fell sharply, suggesting a deterioration in the labor market that could make it harder for the Federal Reserve to raise interest rates.

Nonfarm payrolls increased by only 38,000 jobs last month, the smallest gain since September 2010, the Labor Department said on Friday. Employment gains were also restrained by a month-long strike by Verizon (VZ.N) workers, which depressed information sector payrolls by 34,000 jobs.

Underscoring the report's weakness, employers hired 59,000 fewer workers in March and April than previously reported. While the unemployment rate fell three-tenths of a percentage point to 4.7 percent in May, the lowest since November 2007, that was in part due to people dropping out of the labor force.

No, that was entirely due to people dropping out of the labor force. There's no conceivable way unemployment falls when you only create 38,000 new jobs if the size of the labor force remains constant.

The U3 unemployment rate is pretty well meaningless when it can be this misleading. An unemployment rate of 4.7 percent is lower than what economists used to call "full employment," meaning everyone who wants to work is doing so. If this many people have dropped out of the labor force because they don't even want to work, the only thing that shows is that Obama's policies have succeeded at incentivizing dependency over self-sufficiency.

But there's no way that explains the entire phenomenon. The people most likely to give up looking for work are the ones whose skill level is very low and realistically can only expect a basement-level wage. Obama's making it harder for them too, by pressuring employers to pay starter wages way above the value of the workers' labor. It makes more sense to simply leave positions unfilled than to pay people more than they can return to you in the form of productivity, so low-skill workers have to either look really hard for very low-paying jobs or just give up entirely.

That's how you get to the point where you're only creating 38,000 jobs a month, while pretending your employment picture is neato keen. In fact, the real value of labor has never been more distorted than it is today, and employers are understandably reluctant to expand their payrolls in an environment like this.

And this the legacy Hillary wants to continue, yes? Then tell me again why the "risky" choice would be to elect Donald Trump.