http://www.nakedcapitalism.com/2012/11/the-bls-jobs-report-covering-october-2012-a-good-report-that-still-doesnt-add-up.html
As already mentioned, the employed increased 410,000 seasonally adjusted from 142.974 million to 143.384 million. Unadjusted, it increased 706,000 from 143.333 million to 144.039 million.
The unadjusted number for the employed (706,000) is larger than the unadjusted number for the increase in the labor force (704,000). The labor force is the sum of the employed and unemployed. So this combination of events can only happen if the number of employed decreases by the difference between the two, and it does going from 11.742 million to 11.741 million. It’s unusual although not impossible that the whole of the increase in the employed should correspond to the increase in the labor force.
Seasonally adjusted, unemployment grew 170,000 from 12.088 million to 12.258 million. Since the labor force is 155 million, a tenth of a percent of this is 155,000 or about the same size as the increase in unemployment, explaining why the unemployment rate increased a tenth of a percent to 7.9% seasonally adjusted. Unadjusted, although the unemployment number was essentially unchanged, because of the increase in the labor force, the unemployment rate dropped a tenth of a percent to 7.5%.
The broader seasonally adjusted U-6 rate based on the unemployed (12.258 million, up 170,000), the marginally attached (2.433 million, down 84,000), and involuntary part time workers (8.344 million, down 269,000) decreased 14.7% > 14.6%. This U-6 seasonally adjusted corresponds to 23.035 million, down 183,000 from September. Unadjusted, the U-6 declined from 14.2% to 13.9%.
The BLS’ measure of its undercount, those who do not have a job, want one, but have not looked for one in the last month, declined 285,000 from 6.427 million to 6.142 million.
Because this measure does not reflect well changes in the economy, I have developed an alternative to it. In my alternate calculation, I compare the current labor force to where we would expect it to be in a solid economic expansion: labor participation rate of 67%. The difference between these two is my measure of the undercount.
.67(243.983million) = 163.469 million (where the labor force should be)
163.469 million — 155.641 million = 7.828 million (the real undercount)
This is a decline of 436,000 from the September figure of 8.264 million. This is the capture of the undercount that the BLS misses.
With this number we can now go back and calculate where the U-3 and U-6 really are, that is the real unemployment and real disemployment rates.
Real unemployment: 12.258 million (U-3 unemployment) + 7.828 million (undercount) = 20.086 million (down 266,000 from 20.352 million in September)
SATURDAY, NOVEMBER 3, 2012
The BLS Jobs Report Covering October 2012: A Good Report That Still Doesn’t Add Up
By Hugh, who is a long-time commenter at Naked Capitalism. Originally published at Corrente.
The Bureau of Labor Statistics continues to struggle with a model that does not correspond well to what is going on in the economy. Follow me. In the Establishment or survey of businesses, 171,000 jobs (seasonally adjusted) were created in October. In the Household survey, employment (seasonally adjusted) increased by 410,000 or about two and a half times the number of jobs created. Now the two surveys have very different levels of statistical significance: 100,000 for the Establishment survey and 400,000 for the Household survey, and they cover slightly different population sets, but it would seem a goal of its modeling that the two surveys converge as much as possible.
There are also other problems. In the Household survey last month, the number of involuntary part time workers (seasonally adjusted) spiked 582,000. As I wrote in a post here (Timing and Phantom Data), about 300,000 of that increase was phantom, the result of a statistical glitch in the seasonal adjustment. As I predicted, most of it (269,000) disappeared this month. Curiously, these phantoms may have been converted into voluntary part timers. Voluntary part timers increased 187,000 this month, but there is no way of knowing.
Nor is the larger and supposedly more accurate Establishment survey immune from problems. Look at the revisions (seasonally adjusted) for the two most recent months
August 96,000 > 142,000 > 192,000
September 114,000 > 148,000
September 114,000 > 148,000
The August jobs numbers were revised upward 92%; September, 30% in its first revision. August went from disappointing to very good. I mean what is the point of the modeling if the initial results signify nothing and that the final results may be either bad or good. With all those caveats, let’s turn to the numbers.
In October the potential labor force as represented by the non-institutional population over 16 increased 211,000 from 243.772 million to 243.983 million. The employment ratio increased a tenth of a percent to 58.8%. Multiplying this by the increase in the potential labor force gives us 124,000, an estimate of the number of jobs needed to keep up with population growth. So by this measure October job creation beat population growth by a moderate amount.
Seasonally adjusted, the labor force increased 578,000 from 155.063 million to 155.641 million. Unadjusted it increased 704,000 from 155.075 million to 155.779 million. This is unusual. There has not been this kind of unadjusted increase since the last Presidential election in 2008 and is similar to pre-recession numbers. Given these large increases, the participation rate (the ratio between the current and potential labor force) increased two-tenths of a percent to 63.8% both adjusted and unadjusted.
As already mentioned, the employed increased 410,000 seasonally adjusted from 142.974 million to 143.384 million. Unadjusted, it increased 706,000 from 143.333 million to 144.039 million.
The unadjusted number for the employed (706,000) is larger than the unadjusted number for the increase in the labor force (704,000). The labor force is the sum of the employed and unemployed. So this combination of events can only happen if the number of employed decreases by the difference between the two, and it does going from 11.742 million to 11.741 million. It’s unusual although not impossible that the whole of the increase in the employed should correspond to the increase in the labor force.
Seasonally adjusted, unemployment grew 170,000 from 12.088 million to 12.258 million. Since the labor force is 155 million, a tenth of a percent of this is 155,000 or about the same size as the increase in unemployment, explaining why the unemployment rate increased a tenth of a percent to 7.9% seasonally adjusted. Unadjusted, although the unemployment number was essentially unchanged, because of the increase in the labor force, the unemployment rate dropped a tenth of a percent to 7.5%.
The broader seasonally adjusted U-6 rate based on the unemployed (12.258 million, up 170,000), the marginally attached (2.433 million, down 84,000), and involuntary part time workers (8.344 million, down 269,000) decreased 14.7% > 14.6%. This U-6 seasonally adjusted corresponds to 23.035 million, down 183,000 from September. Unadjusted, the U-6 declined from 14.2% to 13.9%.
The BLS’ measure of its undercount, those who do not have a job, want one, but have not looked for one in the last month, declined 285,000 from 6.427 million to 6.142 million.
Because this measure does not reflect well changes in the economy, I have developed an alternative to it. In my alternate calculation, I compare the current labor force to where we would expect it to be in a solid economic expansion: labor participation rate of 67%. The difference between these two is my measure of the undercount.
.67(243.983million) = 163.469 million (where the labor force should be)
163.469 million — 155.641 million = 7.828 million (the real undercount)
This is a decline of 436,000 from the September figure of 8.264 million. This is the capture of the undercount that the BLS misses.
With this number we can now go back and calculate where the U-3 and U-6 really are, that is the real unemployment and real disemployment rates.
Real unemployment: 12.258 million (U-3 unemployment) + 7.828 million (undercount) = 20.086 million (down 266,000 from 20.352 million in September)
Real unemployment rate: 20.086 million / 163.469 million = 12.3 % (down from 12.5% in September)Real disemployment: Real unemployment + involuntary part time workers = 20.086 million million + 8.344 million = 28.430 million (down 535,000 from 28.965 million in September)
Real disemployment rate: 28.430 million / 163.469 million = 17.4% (down from 17.7% in September)
The long term unemployed, those unemployed for 6 months or longer under the BLS’ restrictive definition of unemployed: without a job and have looked for one in the 4 weeks before the week in which the Household survey was taken increased 158,000 to 5.002 million but remained steady at 41% of all unemployed.
By race, unemployment among whites was unchanged at 7% and increased, after dropping in September, to 14.3% among African Americans.
___________
In the Establishment survey, seasonally adjusted jobs increased 171,000 from 133.584 million to 133.755 million. The private sector gained 184,000 and government lost 13,000.
Unadjusted, jobs increased 911,000 from 133.881 million to 134.792 million. The unadjusted number though large is not unusual. About 2/3 of it comes from state and local schools and 1/3 is part of the annual build toward Christmas. Education at the local level added 455,900 jobs, and at the state level, 149,800: 605,700 total. The private sector gained 361,000.
Seasonally adjusted, most jobs were gained in areas where quality and pay are poor. 51,000 jobs were added to professional and business services
, 36,400 to retail trade, 30,500 to healthcare, and 28,000 to leisure and hospitality.
The average work week for all private employees remained unchanged at 34.4 hours and is the same as it was a year ago. Average hourly earnings decreased one cent to $23.58 and weekly wages declined 35 cents to $811.15. Weekly wages for all employees have increased 1.55% year over year while the CPI has increased 2.1% October to September. Among production and nonsupervisory (blue collar) employees, average weekly hours declined one-tenth to 33.6. Average hourly earnings declined one cent to $19.79 and average weekly earnings dropped $2.32. Weekly wages in this group have increased 0.82% in the last year, again compared to an increase of 2.1% in the CPI. In other words, real wages are falling and they are falling faster in already lower paying jobs.
http://globaleconomicanalysis.blogspot.com/2012/11/nonfarm-payrolls-171000-unemployment.html
Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.
Quick Notes About the Unemployment Rate
October 2012 Jobs Report
Please consider the Bureau of Labor Statistics (BLS) September 2012 Employment Report.
Total nonfarm payroll employment increased by 171,000 in October, and the unemployment rate was essentially unchanged at 7.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, health care, and retail trade.
Click on Any Chart in this Report to See a Sharper Image
Unemployment Rate - Seasonally Adjusted
Nonfarm Employment - Payroll Survey - Annual Look - Seasonally Adjusted
Employment is above the total just prior to the 2001 recession, and about where it was in mid-2005.
Nonfarm Employment - Payroll Survey Monthly Changes - Seasonally Adjusted
Between January 2008 and February 2010, the U.S. economy lost 8.8 million jobs.
Since the employment low in February 2010, nonfarm payrolls have expanded by about 5.0 million jobs. Of the 8.8 million jobs lost between January 2008 and February 2010, approximately 57% percent have been recovered (not accounting for normal demographics growth)
Statistically, 125,000+- jobs a month is enough to keep the unemployment rate flat. For a discussion, please see Question on Jobs: How Many Does It Take to Keep Up With Demographics?
Since the beginning of the year, job growth has averaged 155,000 per month, compared with an average monthly gain of 175,000 in 2011.
Current Report Jobs
Average Weekly Hours
Index of Aggregate Weekly Hours
The index of aggregate hours paints a good picture of the stall in the recovery. Employment is up, but hours are not up proportionally. This reflects the trend to part-time workers and the reduction of hours in part-time workers.
Average Hourly Earnings vs. CPI
Average hourly earnings has been falling for years and lagging CPI inflation since September 2009. Simply put real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly.
For further discussion, please see What's "Really" Behind Gross Inequalities In Income Distribution?
BLS Birth-Death Model Black Box
The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.
The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total.
The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.
Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.
Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.
Birth Death Model Adjustments For 2011
Birth Death Model Adjustments For 2012
Birth-Death Notes
Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.
Note the historically rare occurrence this month of a negative non-January adjustment.
In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small.
For a discussion of how little birth-death numbers affect actual monthly reporting, please see BLS Birth/Death Model Yet Again.
Household Survey Data
click on chart for sharper image
In the last year, the civilian population rose by 3,714,000. Yet the labor force only rose by 1,584,000.
Those not in the labor force rose by 2,128,000 to 88,341,000.
That is an amazing "achievement" to say the least, and as noted above most of this is due to economic weakness not census changes.
Decline in Labor Force Factors
Were it not for people dropping out of the labor force, the unemployment rate would be well over 10%.
Part Time Status
There are 8,344,000 workers who are working part-time but want full-time work. This is a volatile series. This month's decline of 269,000 follows last month's jump of 582,000.
BLS Alternate Measures of Unemployment
click on chart for sharper image
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said "better" approximation not to be confused with "good" approximation.
The official unemployment rate is 7.9%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 14.6%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Duration of Unemployment
Long-term unemployment remains in a disaster zone with 40% of the unemployed in the 27 weeks or longer category. Median duration of unemplyment has been rising for 3 months while the average has been hovering right around 40 week for a year.
Grossly Distorted Statistics
Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.
Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.
Finally, before anyone gets too excited about this jobs report, note that it is just one month, and it may be revised away. Even if not, take another look at the index of aggregate hours and average wages vs. CPI because those charts reflect very important stories not at all seen in the headline numbers.
Mike "Mish" Shedlock
http://www.zerohedge.com/news/2012-11-02/171000-jobs-added-october-unemployment-rate-79
Submitted by Tyler Durden on 11/02/2012 08:31 -0400
Real disemployment rate: 28.430 million / 163.469 million = 17.4% (down from 17.7% in September)
The long term unemployed, those unemployed for 6 months or longer under the BLS’ restrictive definition of unemployed: without a job and have looked for one in the 4 weeks before the week in which the Household survey was taken increased 158,000 to 5.002 million but remained steady at 41% of all unemployed.
By race, unemployment among whites was unchanged at 7% and increased, after dropping in September, to 14.3% among African Americans.
___________
In the Establishment survey, seasonally adjusted jobs increased 171,000 from 133.584 million to 133.755 million. The private sector gained 184,000 and government lost 13,000.
Unadjusted, jobs increased 911,000 from 133.881 million to 134.792 million. The unadjusted number though large is not unusual. About 2/3 of it comes from state and local schools and 1/3 is part of the annual build toward Christmas. Education at the local level added 455,900 jobs, and at the state level, 149,800: 605,700 total. The private sector gained 361,000.
Seasonally adjusted, most jobs were gained in areas where quality and pay are poor. 51,000 jobs were added to professional and business services
, 36,400 to retail trade, 30,500 to healthcare, and 28,000 to leisure and hospitality.The average work week for all private employees remained unchanged at 34.4 hours and is the same as it was a year ago. Average hourly earnings decreased one cent to $23.58 and weekly wages declined 35 cents to $811.15. Weekly wages for all employees have increased 1.55% year over year while the CPI has increased 2.1% October to September. Among production and nonsupervisory (blue collar) employees, average weekly hours declined one-tenth to 33.6. Average hourly earnings declined one cent to $19.79 and average weekly earnings dropped $2.32. Weekly wages in this group have increased 0.82% in the last year, again compared to an increase of 2.1% in the CPI. In other words, real wages are falling and they are falling faster in already lower paying jobs.
Conclusion:
Last month, there was a particularly egregious mismatch between the number of jobs (114,000) and employed (873,000). We have this again this month, 171,000 vs. 410,000, on a reduced scale. Although the discrepancy is similar in absolute size, because the numbers are larger, the relative discrepancy is smaller and opposite in the unadjusted numbers: 911,000 jobs vs. 706,000 employed.
Beyond this, there was a significant drop in the undercount, representing an influx of workers from outside the labor force (as defined by the BLS). Since there was also a drop in involuntary part time workers and only a partially compensatory increase in voluntary part timers, that should mean that the 410,000 increase in the employed in the Household survey was almost all full timers. However, for a large increase in the employed, especially in the economic environment we have, we would expect a significant number of these to be in part time positions. This is even more our expectation given that wages and hours declined in the Establishment survey.
The picture is clouded further by the fact that the BLS numbers do not add up. In the A-8 table, voluntary part timers increased by 187,000 even as 269,000 phantom involuntary part timers disappeared somewhere. This yields a net decline of 82,000. But in the A-9 table, the BLS reports an increase of 144,000 part time workers and also an increase of 233,000 full time ones. Now first, these numbers do not add up to the 410,000 increase in the employed. Second, the A-9 is reporting an increase in part timers even as the A-8 is reporting a decrease. On the other hand, they would fit better with the wage and hour data from the Establishment survey. The shorter story here is that the part time data have always been something of a mess, but until the events of last month, this was a side issue. With the wild variation last month, this brought them to the fore and there continues to be a carryover into October. I guess the operating idea is that by the time of the next report, we will have forgotten about all this.
Overall, the jobs and employment numbers were good this month. The wage and hour numbers were not. There are, however, real problems both between the surveys and within the surveys which place significant question marks on what can be gleaned from any one jobs report.
Last month, there was a particularly egregious mismatch between the number of jobs (114,000) and employed (873,000). We have this again this month, 171,000 vs. 410,000, on a reduced scale. Although the discrepancy is similar in absolute size, because the numbers are larger, the relative discrepancy is smaller and opposite in the unadjusted numbers: 911,000 jobs vs. 706,000 employed.
Beyond this, there was a significant drop in the undercount, representing an influx of workers from outside the labor force (as defined by the BLS). Since there was also a drop in involuntary part time workers and only a partially compensatory increase in voluntary part timers, that should mean that the 410,000 increase in the employed in the Household survey was almost all full timers. However, for a large increase in the employed, especially in the economic environment we have, we would expect a significant number of these to be in part time positions. This is even more our expectation given that wages and hours declined in the Establishment survey.
The picture is clouded further by the fact that the BLS numbers do not add up. In the A-8 table, voluntary part timers increased by 187,000 even as 269,000 phantom involuntary part timers disappeared somewhere. This yields a net decline of 82,000. But in the A-9 table, the BLS reports an increase of 144,000 part time workers and also an increase of 233,000 full time ones. Now first, these numbers do not add up to the 410,000 increase in the employed. Second, the A-9 is reporting an increase in part timers even as the A-8 is reporting a decrease. On the other hand, they would fit better with the wage and hour data from the Establishment survey. The shorter story here is that the part time data have always been something of a mess, but until the events of last month, this was a side issue. With the wild variation last month, this brought them to the fore and there continues to be a carryover into October. I guess the operating idea is that by the time of the next report, we will have forgotten about all this.
Overall, the jobs and employment numbers were good this month. The wage and hour numbers were not. There are, however, real problems both between the surveys and within the surveys which place significant question marks on what can be gleaned from any one jobs report.
http://globaleconomicanalysis.blogspot.com/2012/11/nonfarm-payrolls-171000-unemployment.html
Friday, November 02, 2012 11:06 AM
Nonfarm Payrolls +171,000, Unemployment Rate 7.9%; Good All Around Numbers
Initial Reaction and Election Impact
The establishment report of +171,000 jobs was above what most expected. Hurricane Sandy had no effect. The BLS finished gathering stats before the hurricane hit. This report will likely be viewed as favorable for the president.
On the surface, and in detail, this is the best jobs report in quite a while. Jobs gained were full-time jobs for a change. I do not attribute this report to BLS manipulation.
October Jobs Report at a Glance
The establishment report of +171,000 jobs was above what most expected. Hurricane Sandy had no effect. The BLS finished gathering stats before the hurricane hit. This report will likely be viewed as favorable for the president.
On the surface, and in detail, this is the best jobs report in quite a while. Jobs gained were full-time jobs for a change. I do not attribute this report to BLS manipulation.
October Jobs Report at a Glance
Here is an overview of today's release.
- Payrolls +171,000 - Establishment Survey
- US Employment +410,000 - Household Survey
- Involuntary Part-Time Work -269,000 - Household Survey
- Involuntary Part-Time Work +582,000 last month - Household Survey
- Baseline Unemployment Rate +.01 at 7.9% - Household Survey
- U-6 unemployment -.01 to 14.6%.
- The Civilian Labor Force +578,000
Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.
Quick Notes About the Unemployment Rate
- US unemployment rate +.1 to 7.9%
- In the last three months the unemployment rate dropped .4%
- Those "not" in the labor force fell a second month, last month by 211,000 and this month by 369,000
- In the last year, those "not" in the labor force rose by 2,128,000
- Over the course of the last year, the number of people employed rose by 3,087,000.
- Participation Rate rose .01 to 63.6%
- Long-Term unemployment (27 weeks and over) was 4,844 million a decline of 189,000
- Were it not for people dropping out of the labor force, the unemployment rate would still be well over 10%.
October 2012 Jobs Report
Please consider the Bureau of Labor Statistics (BLS) September 2012 Employment Report.
Total nonfarm payroll employment increased by 171,000 in October, and the unemployment rate was essentially unchanged at 7.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, health care, and retail trade.
Click on Any Chart in this Report to See a Sharper Image
Unemployment Rate - Seasonally Adjusted
Nonfarm Employment - Payroll Survey - Annual Look - Seasonally Adjusted
Employment is above the total just prior to the 2001 recession, and about where it was in mid-2005.
Nonfarm Employment - Payroll Survey Monthly Changes - Seasonally Adjusted
Between January 2008 and February 2010, the U.S. economy lost 8.8 million jobs.
Since the employment low in February 2010, nonfarm payrolls have expanded by about 5.0 million jobs. Of the 8.8 million jobs lost between January 2008 and February 2010, approximately 57% percent have been recovered (not accounting for normal demographics growth)
Statistically, 125,000+- jobs a month is enough to keep the unemployment rate flat. For a discussion, please see Question on Jobs: How Many Does It Take to Keep Up With Demographics?
Since the beginning of the year, job growth has averaged 155,000 per month, compared with an average monthly gain of 175,000 in 2011.
Current Report Jobs
Average Weekly Hours
Index of Aggregate Weekly Hours
The index of aggregate hours paints a good picture of the stall in the recovery. Employment is up, but hours are not up proportionally. This reflects the trend to part-time workers and the reduction of hours in part-time workers.
Average Hourly Earnings vs. CPI
Average hourly earnings has been falling for years and lagging CPI inflation since September 2009. Simply put real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly.
For further discussion, please see What's "Really" Behind Gross Inequalities In Income Distribution?
BLS Birth-Death Model Black Box
The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.
The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total.
The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.
Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.
Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.
Birth Death Model Adjustments For 2011
Birth Death Model Adjustments For 2012
Birth-Death Notes
Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.
Note the historically rare occurrence this month of a negative non-January adjustment.
In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small.
For a discussion of how little birth-death numbers affect actual monthly reporting, please see BLS Birth/Death Model Yet Again.
Household Survey Data
click on chart for sharper image
In the last year, the civilian population rose by 3,714,000. Yet the labor force only rose by 1,584,000.
Those not in the labor force rose by 2,128,000 to 88,341,000.
That is an amazing "achievement" to say the least, and as noted above most of this is due to economic weakness not census changes.
Decline in Labor Force Factors
- Discouraged workers stop looking for jobs
- People retire because they cannot find jobs
- People go back to school hoping it will improve their chances of getting a job
- People stay in school longer because they cannot find a job
Were it not for people dropping out of the labor force, the unemployment rate would be well over 10%.
Part Time Status
There are 8,344,000 workers who are working part-time but want full-time work. This is a volatile series. This month's decline of 269,000 follows last month's jump of 582,000.
BLS Alternate Measures of Unemployment
click on chart for sharper image
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said "better" approximation not to be confused with "good" approximation.
The official unemployment rate is 7.9%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 14.6%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Duration of Unemployment
Long-term unemployment remains in a disaster zone with 40% of the unemployed in the 27 weeks or longer category. Median duration of unemplyment has been rising for 3 months while the average has been hovering right around 40 week for a year.
Grossly Distorted Statistics
Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.
Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.
Finally, before anyone gets too excited about this jobs report, note that it is just one month, and it may be revised away. Even if not, take another look at the index of aggregate hours and average wages vs. CPI because those charts reflect very important stories not at all seen in the headline numbers.
Mike "Mish" Shedlock
http://www.zerohedge.com/news/2012-11-02/171000-jobs-added-october-unemployment-rate-79
171,000 Jobs Added In October, Unemployment Rate 7.9%
As expected, a whopping beat of expectations of 125,000 with 171,000 jobs added In October, and the Unemployment Rate rising modestly to 7.9%, but below the magical 8.0%. And while the U-3 rose, the U-6, or underemployment, declined from 14.7% to 14.6%. Go figure. And finally, the Birth Death adjustment came just 10K off our forecast, printing at 90K.
The Birth Death added +90,000, and has now added 568,000 year to date.
From the report:
Both the unemployment rate (7.9 percent) and the number of unemployed persons (12.3 million) were essentially unchanged in October, following declines in September. (See table A-1.)Among the major worker groups, the unemployment rate for blacks increased to 14.3 percent in October, while the rates for adult men (7.3 percent), adult women (7.2 percent), teenagers (23.7 percent), whites (7.0 percent), and Hispanics (10.0 percent) showed little or no change. The jobless rate for Asians was 4.9 percent in October (not seasonally adjusted), down from 7.3 percent a year earlier. (See tables A-1, A-2, and A-3.)
In October, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.0 million. These individuals accounted for 40.6 percent of the unemployed. (See table A-12.)The civilian labor force rose by 578,000 to 155.6 million in October, and the labor force participation rate edged up to 63.8 percent. Total employment rose by 410,000 over the month. The employment-population ratio was essentially unchanged at 58.8 percent, following an increase of 0.4 percentage point in September. (See table A-1.)The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 269,000 to 8.3 million in October, partially offsetting an increase of 582,000 in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)
In October, 2.4 million persons were marginally attached to the labor force, little different from a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)Among the marginally attached, there were 813,000 discouraged workers in October, a decline of 154,000 from a year earlier. (These data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.6 million persons marginally attached to the labor force in October had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities. (See table A-16.)
Hurricane Sandy had no impact:Hurricane Sandy had no discernable effect on the employment and unemployment data for October. Household survey data collection was completed before the storm, and establishment survey data collection rates were within normal range nationally and for the affected areas. For information on how unusually severe weather can affect the employment and hours estimates, see the Frequently Asked Questions section of this release.
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