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Cramer: Bull can thrive without more jobs

(Click for video linked to a searchable transcript of this Mad Money segment)

For years this market has been all about job creation. That is, pundits have doubted that the rally could endure without more hiring.

The belief is that higher employment stokes economic growth which is ultimately good for business. "People simply don't believe that the S&P 500 and the Dow Jones industrial average can keep rallying like this without better job growth," noted Jim Cramer.

There's only one problem with that outlook. Cramer says it's not necessarily true. In fact, "less job growth can actually be good for stocks," he said.

Huh?

Of all the correlations in the market, Cramer says the strongest is that stocks go higher when companies beat expectations. "And many companies have been beating those expectations by not hiring," Cramer explained.

Siegfried Layda | Photographer's Choice | Getty Images

For better or worse, the "Mad Money" host thinks the phenomenon is playing out all across the market.

"Look at Domino's," Cramer said. "The stock is moving up after a big lag, but what's the key to Domino's growth? It's technology which allows a franchise to have fewer workers because their online ordering system generates efficiency. The fewer the workers, the more profitable the company."

Cramer said strength in Alcoa also reflected similar developments. "Alcoa has been closing its high cost plants. A high cost plant is an inefficient plant, and it's often a plant with too many employees."

Cramer added Union Pacific as another example of a stock that may rally even as our economy fails to generate jobs. In this case Union Pacific isn't laying off, rather "It wins from trains bringing goods made in Mexico to the west coast for export. Our government made a trade deal that's been terrific for Mexico, but, believe me, it's been the opposite of terrific for hiring in our country."

Cramer also cited partnerships with Salesforce.com as another example of the phenomenon. Although Salesforce shares have been challenged, revenue has been growing like a weed. "That says companies are looking to get more productivity out of their current sales force, and not to hire more salespeople."

Dig down into the market and Cramer says you can find similar circumstances playing out in almost every corner of every sector. That is, in some way, the lack of hiring is either directly or indirectly is driving gains.

Therefore Cramer believes there's every reason to think the rally can endure without significant job creation.

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"Unfortunately, there's no linkage between a healthy job market and a healthy stock market. But there is a link between not hiring workers and higher stock prices," Cramer said. "So please, don't be skeptical of this rally if we see more subpar hiring when the big non-farm payroll number comes out on Friday. The bull is fueled by profits, not people."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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