The Jobs Situation is Dismal - More on the May Unemployment Report

This month's unemployment report is dismal, so maybe, just maybe we should demand policy makers start offering real solutions to the jobs crisis.

Earlier we reviewed the May 2011 BLS unemployment report. As if only 58,000 jobs was not bad enough, both April and March new jobs numbers were revised downward.

The change in total nonfarm payroll employment for March was revised from +221,000 to +194,000, and the change for April was revised from +244,000 to +232,000.

Let's drill down deeper to show just how badly America needs good jobs.

There are 13,914,000 people officially unemployed, and if one takes the alternative measure of unemployment, it's 24.4 million.

Below is a new graph, courtesy of the Saint Louis Federal Reserve, for the unemployment rate of just those unemployed 15 weeks or longer. 59.6% of the people who are officially counted as unemployed have been so 15 weeks or longer. The number of people unemployed 15 weeks or longer as part of the civilian labor force is 5.3%. Compare this to the official 9.1% unemployment rate. This means that it takes most people who are unemployed almost 4 months or more to find a job...if they do.

 

 

There are 2,664,000 people who are unemployed for less than 5 weeks in May, a decline of -27,000. People out of work 5 to 14 weeks dropped -15,000 and 15 to 26 weeks unemployed declined 22,000. Below is the graph of those unemployed for less than 5 weeks.

 

 

The below graph is the median time for being unemployed over the last 20 years. Look at the pathetic dramatic increase, which jumped in May to 22 weeks from 20.7. That means there is overall lost income by being out of work longer and we haven't even discussed how the new jobs are paying way less and most of the jobs being created are low paying jobs. The average time is even worse, 39.7 weeks. That's almost 10 months as the average time to find a job. There is a vast deviation from the average and the median duration of unemployment. This means there are huge percentages of the unemployed who simply cannot get a break!

 

 

Most of the unemployed increase occurred with those unemployed 27 weeks or longer. These long term unemployed increased by 361,000 people in May.

The problem with this number is we do not know the percentage of those who plain fell off the count and didn't get a job. 45.1% of the official unemployed have been so for 27 weeks or longer. Those employers refusing to give a job to someone who needs a job, refusing to hire someone unemployed....should be sued for discrimination in my opinion.

  • Long term unemployed - 6.2 million
  • Forced Part Time - 8.55 million
  • Marginally attached to the labor force - 2.22 million

Of the Marginally attached, 1.083 million are discouraged. Forced part-time decreased -52,000 this month, with those reporting the reason is slack business conditions increasing by 145,000. People who could only get part-time work decreased -7,000 in May. The 2.22 million marginally attached are not counted in the official unemployment rate, but you can be guaranteed they do need a job. The BLS reports 6,821,000 people who are not counted actually want a job. That's huge.

 

 

U6, defined as total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force, (table A.15), was 15.8%.

To even get back to pre-recession unemployment rate levels we need a good 424,000 jobs created each month. That's permanent jobs. Even if the U.S. created 400,000 permanent jobs each month, it would take over 17 months to recover the jobs lost since December 2007, the start of the great recession, or 6.94 million jobs. If one created 400,000 jobs per month, to get to the start of the great recession unemployment rate of 5%, or roughly 10.7 million jobs, it would take over 26 months, or over 2 years to recover. Below is the seasonally adjusted monthly change in the number of payroll jobs in the U.S. See a lot of over 400,000 monthly increases in the past decade?

 

 

In looking over table B1 we can get a little more detail on what kind of jobs were created (and lost) on the permanent jobs front.

  • Financial: +3,000
  • Information: -1,000
  • Construction: +2,000
  • Manufacturing: -5,000
    • Durable: +8,000
  • Mining & Logging: +6,000
  • Health and Education: +34,000
  • Leisure and Hospitality: -6,000
  • Professional & Business Services: +44,000
    • Temporary Help: -1,200
    • Professional &technical services: +40,300
    • Accounting & Bookkeeping: +17,800
  • Trade, Transportation, Utilities: +3,000
    • Retail Trade: -8,500
  • Government: -29,000
    • Local Government: -28,000

While for some reason public or government workers are under assault, local government employees are clearly hurting. There has been 645,000 local government jobs lost since May 2010.

Below is the graph of the monthly change in manufacturing payroll jobs, seasonally adjusted, against the ISM Manufacturing Employment Index, which dropped -4.5 percentage points for May.

 

 

Bear in mind illegal workers and foreign guest workers are counted as employed Americans, which can distort occupational sectors, particularly the Engineering, I.T., Science and Technology ones. Below are the unemployment rates per occupational sector from table A-14, not seasonally adjusted.

  • Financial: 6.8%
  • Information: 7.3%
  • Construction: 16.3%
  • Manufacturing: 9.6%
  • Transportation, Utilities: 8.0%
  • Mining & Gas, Oil: 3.8%
  • Health and Education: 5.7%
  • Leisure and Hospitality: 10.6%
  • Professional & Business Services: 9.8%
  • Retail, Wholesale Trade: 9.0%
  • "Other" Services: 8.4%
  • Government: 3.9%
  • Agricultural: 8.7%
  • Self-employed, unpaid family: 6.1%

Probably the most horrific not seasonally adjusted unemployment rate is the 9.8% for Professional and Business Services unemployment rate. This occupation category implies a college degree. This particular area is fraught with foreign guest worker Visas, which distorts the real occupational unemployment rate. If an American is displaced by a foreign guest worker, then is forced to take a job at Walmart, that person is no longer categorized as a Chemical Engineering PhD out of work, but instead as a retail trade worker.

The above numbers are not seasonally adjusted so part of the agricultural and construction rates are due to the seasons, that said, construction unemployment has been decimated anyway you look at it.

The BLS also notes most of the new jobs in leisure & hospitality are low paying:

Over the past 3 months, this industry added 151,000 jobs, with nearly two-thirds of the growth in food services and drinking places.

The average work week was 34.4 hours, yet manufacturing average hours are 40.6. Average earnings for the private sector (drum roll please), increased 6¢, $22.98/hr. Yet the worker bees, or non-supervisory jobs average pay increased 6¢ to $19.43/hr. Take a look at how many industry sections are below full time hours. Is a common practice among employers to keep workers part-time, in order to deny them full-time benefits. These numbers have improved to more full time per industry.

 

 

You probably also want to know the birth/death model. What is that? It's a statistical adjustment to compensate for new businesses and dead businesses who are not actually tallied by data reports. Those jobs created and died outside the statistical reporting time window due to lag. So, the BLS estimates how many jobs can be attributed to those firms which are not actually counted. This month's adjustment was 206,000 jobs. One cannot directly subtract the birth/deal model monthly numbers, because unemployment data is seasonally adjusted, yet the birth/death adjustment is not seasonally adjusted, get that? Anywho, jobs attributed to new and dead businesses are just an estimate in so many words. Not seasonally adjusted, payrolls added 682,000 jobs. This is the reason why one cannot apply the birth/death model to seasonally adjusted data. Ok? You cannot mix them. If you want to take off the birth/death model you must do it to not seasonally adjusted data and then run the statistical algorithm to obtain the seasonally adjusted result.

Subject Meta: 

Forum Categories: 

Bad News as Motivator?

That's wishful thinking.

What on Earth the people in charge think the unemployed are supposed to do is anybody's guess.

I suppose they will continue their best not to think about us.

You must have Javascript enabled to use this form.

Good point. I worry that they have thought it through

Mark Provost said it well in Why the Rich Love High Unemployment and Numerian nailed it in a response to Robert's post on Jobs being the #1 issue,  Corporations are not really interested in your plan. They benefit from this in some perverse way and they're in no hurry to fix it. What a massive betrayal of the citizens.

 

You must have Javascript enabled to use this form.

Temporary

The charts do show improvement. It looks like expensive oil, earthquakes, tsunamis, meltdowns, tornadoes, budget and debt limit grandstanding have slowed the jobs recovery. Hopefully this is temporary. Not a "brick wall" like I saw somewhere today. I think its a blip and we will continue a slow recovery. The charts also show how incredibly far we have fallen employment wise. Good grief what a nightmare.

You must have Javascript enabled to use this form.

weather, tornadoes, tsunamis not the cause

The BLS addresses this and shows that the time window to count as unemployed is too large for this to have any effect.

It's not the weather. Many economic reports (many overviewed in the Instapopulist) show the economy is slowing and we just got the worst ISM manufacturing report in ages.

The services was ok but I've found the ISM generally is a good indicator. Bottom line, they simply refuse to enact policies to do something about trade, invest in America (infrastructure, private plants, etc.) and make it clear the U.S. must be a production economy.

Right now, it's all "China". Make a design, ship it to China to manufacture, make a chip, same deal, new product, off to China it goes....

That will simply not generate economic growth and jobs.

You must have Javascript enabled to use this form.

GOP is insane, we should get to policy specifics

Why I put up that FMN, lifting the veil. That's it, the lesser of two evils. We have a corporate oligarchy and that's why we cannot get any policy to create jobs, grow the real economy and no, that ain't tax cuts.

I think we need to list agenda items that would turn the economy around. Confronting China on currency manipulation has to be the most bi-partisan goal I can think of. Most of Congress claims they want this to happen, yet they do not pass anything and override a veto.

They should and they should have done this years ago. China has become the McDonald's of manufacturing and it's getting so bad, I suspect even if a company wants to manufacture in the U.S. they probably cannot find the chain to even do it.

That needs to change, immediately and should be literally subsidized. They need outsourced manufacturing for a host of smaller products, on shore so companies can "order up" their products here instead of "ordering up" their products in China.

You must have Javascript enabled to use this form.

So far I watched a third of FMN its good stuff!

Its true when the Dems hang with the likes of Rubin, Geithner and Summers you know our choices are limited. Warren seems to be the real deal for consumer protection and thats why they will never let her have any real power. Although our choices are limited there is still a difference. You said it correctly "the GOP is insane". Many people here have spelled out what austerity will do now. An endless downward spiral. They are deliberately trying to sabotage the economy with a fake debt crisis. They stole out of the recovery act with tax cuts and why was the AMT fix included in that package? It was part of the regular budget in tears past. We need to spell out that the GOP way is 30% unemployment for the masses and record profits for the international corporations. Who will pay no taxes and from which our nation will derive no benefit.

You must have Javascript enabled to use this form.

should I put together a list of the best of FMN?

There are about 150 Friday Movie Nights and some of them are incredible. Gotta love the Internets when they put these works online for free, although finding them is a real hunt. The Quest for Oil to me is a stand out economics documentary, shame it's not updated to include the BP oil spill.

You must have Javascript enabled to use this form.

My Nomination is "Bound for Glory"

A truly inspiring biography of Woody Guthrie.
It shows him to be an awesome, effective labor organizer. Ain't making Woodies anymore.
AMC used to show the flick on Woody's birthday in
February. But you know how it is now..

You must have Javascript enabled to use this form.

Burton Leed

FMN "best of" requirements

It has to be online, free, known it's online by the copyright holders, embeddable. I've seen Bound for Glory and Woody Guthrie gave voice to the people during the Great Depression, but I think the film is owned by FOX or Turner or something and it's not online for free. There are some streaming sites which fund themselves through commercials, I'll go hunt for it to see if I can get it, but legally. I wish more content would figure out a way to make revenues upon view, but we cannot violate copyright and ownership laws if it's not. It's a bummer, since we're a niche site, so we automatically are a guaranteed audience.

Also, anyone making any documentary about economics, workers, trade and so on, not only is it a labor of love, to produce a quality documentary costs major money. Would be nice to give them revenues in the form of commercials or whatever, but unfortunately the Internet hasn't figured a lot of this out.

You must have Javascript enabled to use this form.

A new employment paradigm ahead

Seems to me a whole new wave of firings could be just around the corner.

Everyone bemoans those record profits and why the corporations won't use those profits to hire. But one of the main reasons they even made all those profits was due to all the firings!

Now normally when this happens, aggregate demand shrinks and a new equilibrium established. But demand did not nearly take the hit it would have because of all the stimulus. Five trillion dollars in two years masked that true demand was about to go off a cliff.

For every 10 fired, on average 2 were taken back as benefitless temporary workers to fill gaps and move around as needed, while the companies sucked up huge profits.

But the double whammy of the stimulus ending and higher input costs is now squeezing margins mercilessly. Thus the death spiral of mass firings hence less demand leading to more mass firings has only been kicked down the road.

The mask of trumped up demand i.e 99 weeks of unemployment compared to the usual 26, 150 billion a month in money printing etc. and etc. is getting pulled off at the same time input prices with limited ability to pass on to the consumer is putting the kabosh on profits.

The 2009 Death Spiral that wasn't, may indeed just be a late baby about to make it's entrance in 2011.

You must have Javascript enabled to use this form.

discrimination at job fair

I was at a job fair in Pittsburgh this week where a representative of the event specifically told us before entering the convention hall, that the unemployed or self-employed would NOT be considered for a job!!
I had heard of this happening before, but seeing it happen right in front of me was eye opening.

You must have Javascript enabled to use this form.

Call your Congressional Reps, plus the EEOA/DOL

Seriously. Report them and made a big deal out of this. We've seen multiple reports on this crap and it is, in my view, pure discrimination. Corporations lay people off like Schnidler's list and usually has nothing to do with that person being a great employee or not.

But these bastards are trying to use someone's need for a job as a reason to reject them for a job, which is pure B.S.

You might mention another thing, how about a PA state funded venture capital to put these people to work forming startups, new businesses, with funding. One would have to go through the same dog and pony show all startups go through to get funding, but make it a top priority to start organizing the unemployed to do this.

Nothing would be better than to form corporations to compete these S.O.B.s right out of business.

You must have Javascript enabled to use this form.