11/02/2012 05:44 pm ET Updated Jan 23, 2014

The Election Jobs Report

The October Non-Farm Payrolls rose by 171,000 net jobs and the unemployment rate moved up to 7.9 percent from 7.8 percent. The civilian labor force and labor force participation rates increased. Both of these are positives. Increases were modest and are coming off multi-decade lows. Less positive was a slight increase in black unemployment to 14.3 percent. The broad measure of unemployment that includes involuntary part-timers and the marginally attached, U-6, edged down from 14.7 percent to 14.6 percent. The public sector continues to be the area of greatest employment weakness. The public sector's total employment declined by 13,000 net jobs in October 2012. Unusually, the federal (-6,000) and state (-7,000) governments shed jobs while local employment was unchanged.

Ninety-five percent of new job creation was in the private service sector, 163,000 of 171,000 jobs created. August and September Non-Farm Payrolls were revised upward. August was revised from +142,000 to +192,000 and September was revised from +114,000 to +148,000. Revision added 84,000 to job growth over the last two months. We are tracking to have a 2012 jobs story very similar to the 2011 job story.

The October Non-Farm Payrolls are very much a political report. In four days, voters -- committed and swing -- will vote with spin regarding this data ringing in their ears. Thus, we must approach the jobs numbers with extra care to avoid being part of the deafening chorus of cheers and equally voluminous chorus of jeers. This is a modestly positive jobs report. Our 2012 average is 157,000 net new jobs a month. Thus, this month's numbers are very much in keeping with recent performance. The public sector remains very weak. This may become more of an issue as patience runs low regarding the cleanup and recovery from Super Storm Sandy. We continue to think the missing story is earnings. These are stagnant to down over the last four years and counting. Over 92 percent of the labor force is employed. They have not seen real wage growth in years. This is the missing discussion as we focus on vital jobs numbers. Hours and wages remain depressed.

The average workweek for production and non-supervisory employees on private non-farm payrolls edged down by 0.1 hour to 33.6 hours. In October, average hourly earnings for all employees on private non-farm payrolls edged down by 1 cent to $23.58. Over the past 12 months, average hourly earnings have risen by 1.6 percent. In October, average hourly earnings of private-sector production and non-supervisory employees edged down by 1 cent to $19.79.

The productivity numbers, released on Thursday, Nov. 1, continue to be under-factored and under-reported. This is a quarterly series and deserves much more attention. Q3 2012 Productivity showed a sharp rebound and posted a 1.9 percent seasonally adjusted, annual rate increase. Unit labor costs decreased in Q3. This tells us, once again, that hours worked are lagging output per hour. This indicates we continue on the trend of increasing profits with weaker labor demand and wage/salary growth.

Over the last 12 months prices, as measured by the Consumer Price Index (CPI) have increased by 2 percent. Hourly compensation has increased 1.8 percent. Americans are producing more at work and their wage/salary increases are less than rising costs of what they produce and purchase. Doing more for less is a feature of the last four years and is contributing to growing inequality and economic dissatisfaction among the majority of Americans. Real hourly compensation is down .4 percent over Q3. In 2011 real hourly compensation, average hourly wages adjusted for price changes, decreased by .5 percent.

Weak job growth, and even weaker earnings growth has produced much of the dissatisfaction for polls, pols and the public voice. This is true of Republicans, Democrats and Independents, as well as the sad legions that will cast no vote on Tuesday, Nov. 6.