The September current population survey unemployment report dropped to 5.9% and all sing hallelujah the job crisis is over. The unemployment rate hasn't been this low since July 2008. The unemployment rate dropped two tenths of a percentage point in a month, but why it dropped is more interesting. The main reason is the decline in those participating in the jobs market. The labor participation rate is the lowest rate in 36 years, not seen snce February 1978. The ranks of the employed has increased 2.3 million in the last year while those not in the labor force has swelled by almost 2 million.
This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS. This survey tells us about people employed, not employed, looking for work and not counted at all. The household survey has large swings on a monthly basis as well as a large margin of error. Yet, it is our only real insight into what the overall population is doing for work, or not.
The ranks of the employed increased by 232 thousand this month which is a great showing. From a year ago, the employed has increased by 2.33 million and now tallies 146,600,000 as shown in the below graph. These figures are good signs people really are getting jobs.
Those unemployed stands at 9,262,000 a -329,000 decline from last month. Below is the change in unemployed and as we can see, this number normally swings wildly on a month to month basis generally.
Those not in the labor force increased by 315,000 persons. The below graph is the monthly change of the not in the labor force ranks. Notice the increasing swells and wild monthly swings. Those not in the labor force has increased 1.9 million in the past year.
The most frightening statistic of the household survey is the labor participation rate. The labor participation rate is at 62.7%, a record low, and is shown in the below graph.
These are not all baby boomers and people entering into retirement. Below is a graph of the labor participation rate for those between the ages of 25 to 54. These are the prime working years, so once cannot blame retirement and college on the declining participation rate. As we can see, this 80.7% rate has dropped and is at lows not seen since the 1980's recession.
The civilian labor force, which consists of the employed and the officially unemployed, decreased by-97 thousand this month. The civilian labor force has increased by 389,000 over the past year. This shows a fairy static situation for we know new workers enter the labor force every day from increased population growth. Therefore we have a large segment of the population exiting the U.S. labor market.
In spite of wild statistical swings, those not in the labor force grows faster than the population which has the potential to work. Below is a graph of those not in the labor force, (maroon, scale on the left), against the noninstitutional civilian population (blue, scale on the right). Notice how those not in the labor force crosses the noninstitutional civilian population in growth and the accelerated growth started happening right in 2008. There were not enough babies born starting in 1943 to explain the steep 2008 and beyond increase.
Below is a graph of the civilian labor force, or the official employed plus unemployed, in maroon, scale on left, against those not in the labor force, in blue, scale on right. Notice how those not in the labor force as a trend exceeded those considered employed and unemployed starting around mid 2009. What we have seen is a never ending growing segment of the population that is considered neither employed or unemployed, i.e. not in the labor force, increasing, above the trend line of those who would be naturally dropping out, such as the retired and those in school. Not in the labor force figures do include retirees and the size of the population greater than age 65 has grown.
Those considered employed as a ratio to the total Civilian noninstitutional population had no change and stand at 59%. For the interested, there is a relationship between the employment-population ratio and the labor participation rate (LPR): employment-population ratio = LPR * (1 - unemployment rate).
There are millions of people who need full-time jobs with benefits who can't get decent career oriented positions. Those forced into part time work is now 7,103,000, an decrease of -174,000 from last month. Those stuck in part-time hours has declined by -811 thousand from a year ago. The below graph shows levels of people who could only get part time hours have remained elevated since the recession and these are all people who want full-time, they just cannot get it, it is not by choice, although a -10.2% drop in a year is a positive step in the right direction.
There are two categories of those working part-time hours. Those who could only get part-time jobs and those working who got their hours cut due to businesses not having enough work for them. The number of people who could only get part-time work just isn't budging and decreased by -25 thousand to 2,562,000. The number of people who could only find part-time work is shown in the below graph and from a year ago has grown by 14,000.
People can also be stuck with part-time hours due to slack working conditions. This figure has remained just obscenely high for years now and this month is 4,162,000 From a year ago those who are getting their hours slashed due to weak economic demand has declined by -16%,or -781 thousand Below is a graph of forced into part-time work because they got their hours cut, as a percentage of the total employed. Part-time work due to cut hours is known as slack work conditions. Slack working conditions causing part-time hours remaining high or increasing implies economic conditions have not improved enough, that there still is just not enough demand in the economy for businesses to run full steam. Below is a graph of forced part-timers due to slack work conditions as a percentage of the civilian labor force. This is a recession economic indicator, notice the line slope matches strongly the gray recession bars of the graph. In other words, part-time work due to a crappy economy has clearly improved over the last year.
U-6 is a broader measure of unemployment and includes the official unemployed, people working part-time hours because that's all they can get and a subgroup not counted in the labor force but are available for work and looked in the last 12 months . The U-6 alternative unemployment rate still leaves out some people wanting a job who are not considered part of the labor force. U-6 stands at 11.8%.
The long term unemployed, or those unemployed for 27 weeks and over, has dramatically declined and now stands at 2,954,000 people. The long term unemployed are the crisis of our time and we know these people did not get jobs since the ranks of the employed gained less than the decline in the long term unemployed. From a year ago the long term unemployed ranks have decreased by -28.4%, but this does not mean at all these 1.171 million folk found work.
The marginally attached are people not in the labor force because they have not looked for a job in the last month, but have looked for a job in the last year. This number has ballooned since 2007 and not returned to pre-recession levels. The graph below is the number of people considered marginally attached to the labor force, currently at 2,226 million. The marginally attached should only be viewed as a long term trend for the figures are also not seasonally adjusted.
Discouraged workers are people, not counted as part of the civilian labor force, who not only want a job, but also looked for one in the last year. These people aren't job hunting now because they believe there are no jobs out there. Below is the graph of discouraged workers, currently at 698 ,000 people and are a subset of the marginally attached. Discouraged workers is kind of a barometer for how the job market is perceived. From a year ago workers discouraged has declined by 18.1%. In other words this figure has budged, implying the job market has finally improved.
Our favorite statistic from the CPS survey is how many people who are considered not in the labor force, report they want a job now. It is a direct survey question from the CPS. The survey asks people who are not being counted in the unemployment statistics and official unemployment rate if they want a job. The number who answer yes currently stands at 6,349,000, a very large number of people. Those who are not counted yet report they want a job includes the discouraged workers and marginally attached and is seasonally adjusted. This figure has increased by 231 thousand or 3.8% from a year ago. If the job market was really that great, this figure should drop along with the unemployment rate.
The average length of unemployment is 31.5 weeks and a year ago was 36.8 weeks. The average duration is still very high even after dropping over a month in the last year.
The median time one is unemployed, which means 50% of people have gotten a job in this amount of time is 13.3 weeks. This is over four months to be without a paycheck as the median, and even after that length of time 50% of the people still can't find work.
Those unemployed less than five weeks declined by -226 thousand from last month and stands at 2,383,000. Those unemployed between five weeks and 14 weeks is 2,508,000 and people who had been unemployed for 14 weeks to 26 weeks was 1,416,000. The long term unemployed is 2,954,000 and is 31.9% of the total official unemployed. A drop in the unemployed does not necessarily mean they found a job.
The household survey gives the reason for new unemployment status. Job losers and those who completed temporary jobs dropped by -316,000 and stands at 4,530 ,000. Below is a graph of job losers by levels. While the figure has dropped dramatically it is still higher than any other recession. In other words people are still losing their jobs as a pattern in comparison to before 2008.
People join the ranks of the unemployed because they were laid-off, fired, they quit, the job was temporary and thus ended, they entered the labor force for the first time and re-entrants. Re-entrants are people with work experience, yet have been considered not in the labor force for some time. Recall to be considered unemployed one has to be actively searching for a job or expecting to be recalled and on temporary layoff. Re-entrants decreased by -36 thousand people this month. Below are re-entrants as a percentage of the total unemployed. As you can see, as jobs and opportunities appear, people re-enter the labor force looking to snap one of those jobs. If there were really a lot of job opportunities out there, the slope of this graph would spike up and should spike up to the extremes since there are so many who have stopped looking, are not counted as unemployed currently, who could re-enter the labor market.
Re-entrant unemployed levels, graphed below, are yet another sign on how people are not finding work, giving up, then dropping out of the labor force and then trying again to get a job. If the job market was good for a long period we'd see this statistic drop as new entrants would have found work instead of being once again officially counted as unemployed.
This month's household survey, makes it seems like the job market is perfectly fine. Yet if we look at labor participation rates, that is the reason the unemployment rate has dropped so much. It is also true the job market has improved and more people are finding work.
Here is our past overviews CPS unemployment statistics.