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Roundup of the Unemployment Numbers

By: Daniel Horowitz (Diary)  |  August 5th, 2011 at 01:28 PM  | 

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For those who are interested in the wonky numbers of the unemployment report, here is a brief presentation of some of the more ominous figures.  The latest unemployment report shows that we are living through the quintessential Keynesian economic recovery.  We are not shedding more jobs at a terribly fast pace, but, instead of adding jobs by a pace of 500-800,000, we are stagnating at the bottom of the employment trench created by the recession.

  • Jobs created in July:  The net increase in new jobs this month was 117,000.  There were 154,000 jobs added to the private sector, while the public sector shed 37,000.  As such, the number of unemployed declined from 14.087 million in June to 13.931 million, lowering the unemployment rate from 9.2% to 9.1%.
  • Size of civilian labor force:  So why is this report such bad news?  Well, if you shrink the size of the pool, the unemployment rate will actually go down.  While a net-117,000 jobs were added in July, 193,000 long-term unemployed persons left the labor force.  In May, the civilian labor force stood at 153.693 million.  Now, there are only 153.228 in the labor force, a shrinkage of 465,000 people.  Of the remaining 153.228 in the labor force, there were 139,296,000 people working in July, down 38,000 from 139,334,000 in June.  There are 490,000 less workers than there were in May.  This is where you get the 9.1% figure.
  • Size of working age population:  While the number of people looking for jobs has shrunk, the population continues to grow rapidly.  The size of the civilian noninstitutional population grew from 239.489 million in June to 239.671 in July, an increase of 182,000.  Consequently, the employment-population ratio now stands at 58.1%, the lowest level since 1983.  We need almost 200,000 new jobs just to break even, yet we only gained 117,000 new jobs, and actually lost 193,000 from the labor force.  This is a recipe for disaster.
  • Comparison to January 2009-Obama’s inauguration date:  In January 2009, the labor force stood at 154.185.  This means that a net 957,000 people have left the labor force since Obama was inaugurated.  Concurrently, the size of the working age population grew over 4.9 million from 234.739 million at the time Obama was sworn in.  Also, in January 2009, 142.201 million were employed, almost 2.9 million more than today.   So we have a larger population, a smaller workforce (resulting from discouraged workers), and more unemployed.  As a result, there are almost 5.9 million more working age people who are not in the labor force today.  Also, there are 885,000 more people not in the labor force who want a job as compared to January 2009.
  • Duration of unemployment: The average (mean) duration of unemployment is 40.4 weeks, a record high. By comparison, the average duration was 19.9 weeks in January 2009.

Consider this your summer of recovery, data crunching open thread.

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  • Death_of_the_Donkey

    First, I also posted on the jobs report this morning if anyone is interested in my take.

    Second, since 1981 we have only had a grand total of 2 months that had job gains greater than 500k, so your supposition is substantially off.

    The number of those 65+ who are not in the labor force has risen by 1 million since Obama has taken office (ie the wave of boomer retirements (and unfortunately I haven’t been able to find a good stat for those taking early ss benefits at 62-64).

    All in all, this was a mixed report, as prior months were revised higher (again) and we did see some positive job creation (also roughly 20k of those government reductions were in MN and will presumably be added back in next month).

    • http://redmeatconservative.blogspot.com/ Daniel Horowitz

      is that after such a deep and sharp recession, we will need such an unprecedented level of job creation just to get out of the hole and achieve the growth that we were slated to reach. We will need many months around 500k, and a few, even more. Yes, this report in a vacuum is kind of mixed, but as part of a broader context, it is horrible.

      After declining to the bottom of the depths, if we merely stagnate or go up slightly, we will ostensibly be flat lining at the bottom of the trench. I really don’t expect to lose too many more jobs. After all, how much further could we go. We need to roar back in order to recover the lost territory.

      • Death_of_the_Donkey

        but without a massive increase in construction jobs *highly unlikely) or a resurgence in manufacturing (highly unlikely due to automation), I simply do not see where these jobs come from.

        I would also argue that a substantial number of the jobs we lost during this recession were either from the bubble (ie the construction jobs) or obsolete jobs that only had still existed due to the relative growth in the economy. As soon as businesses had to retrench, they quickly found many people to let go that had been made obsolete by technology years ago. Hence why the unemployment rate for college grads is 4.3% and the rate for those without hs diplomas is 15%.

        • JSobieski

          Nonetheless, jobs do come.

          For example, in manufacturing, automation has been the big story since the 1980s. Yet, jobs did increase in the 80s and 90s, as well as between the aftermath of 9/11 and 2007.

          The economy is too specialized for most people to make intelligent predictions on future jobs outside their own specific industry.

          • Death_of_the_Donkey

            wasn’t about where jobs would come from or from what industries per se, but that technology has wiped out tons of job classifications that all industries used to rely on that helped boost job numbers. In other words, the modern new business/industry (whatever it is) is going to come online much leaner and much less labor intensive than even in the recent past (making net new job creation very difficult in our globally competitive world). Further, I would also argue that in the 80s, we really didn’t have to compete much globally (in terms of jobs) and in the 90s, we benefited greatly from the US based tech industry (that turned out to be quite a bubble). And again, the 2003-2007 period was another period of bubble driven job growth (and even then it was fairly weak).

            I guess what I am more concerned about is the data points showing that the less educated have dramatically higher unemployment levels than those with educations and what I do not see (at this point or in the near future) is any industry that is going to employ those people.

          • JSobieski

            Even with a freer market, there is also the issue of wages—or lack thereof for uneducated/unskilled workers.

            In terms of bubbles, there have always been bubbles and there will always be bubbles. I don’t think it is fair to characterize all job creation from the 90s on as bubble-based. IT is a real industry, with a lot of real jobs. Apple, Oracle, Microsoft, Google, Dell, et all are real companies with real employees.

            Technology always wipes out job categories. Remember the black smiths, cobblers, and whip makers?

            I am not disagreeing with you as to the challenges, I am just resisting the characterization that this is something new or unprecedented.

            If the economy gets humming, people outsource a lot of work that 50 years ago was done in-house. Landscaping, restaurants, handyman tasks, house cleaning, etc. didn’t use to be industries on to themselves. Now, they employ a lot of people.

          • edintexas

            Technology does that, don’t you know. Look at the masses of people who never again found jobs when the automobile dispatched the horse and carriage/wagon. Why my Great Uncle Frank was done out of work when the truck replaced his horse and wagon on the milk route. How anyone ever delivered milk again is a mystery, the horse knew the route and would continue to plod along while Frank delivered the milk. A truck can’t do that!

            Oh, wait. Milk was still delivered when I was younger, though from a truck, and the supermarket subsequently did that job in. And there were still horses and wagons around for the “junkman” too. Come to think of it, I have a farrier who comes out to my place every 6 weeks and takes care of the horses. Guess the auto didn’t totally eliminate all those jobs. And, truth be told, enlisting in WW I eliminated Uncle Frank from the milk route, not the truck.

    • gekster

      I don’t think to many are interested in your take.

      And I would like to know, what economics school did you attend,
      or do you just play an Economics Major on the net.

  • anjinconsulting

    The number of jobs added in July in the ENTIRE country since Captain Zero and his minions allocated $800B for “shovel ready projects” is approximately 61% of the capacity of the Indianapolis Motor Speedway.

    If the $800B stimulus were simply passed out to the population of the United States, each person would have recieved approximately $25.6 million dollars; instead we were treated to cash for clunkers and a housing “tax break”.

    Come election time, the insane clown asylum needs to be shuttered and the population therein sequestered in jail.

    • Death_of_the_Donkey

      the calculator is your friend.

      • anjinconsulting

        :-)

  • snowshooze

    That the Unemployment numbers are pure BS…
    But it helps.

  • 1stRichard

    Lowest Unemployment is in, Education and Health, Financial, Government. The highest unemployment is in those shovel ready jobs, Construction. Manufacturing and Trade is also high.

    Unemployed by reason, 59.4 percent persons who completed temporary jobs, Reentrants 24.7 percent. This would indicate a large number stuck in the temporary employment agency underemployed merry-go-round and should not be counted as really employed, at a 50 percent ratio this would make the actual unemployment over 16 percent, most likely it is much more. Combined with the length of time of employment the skills employment is now totally devastated. There should be no doubt this has ruined the United States, possibly for decades.

    I hope I am reading this wrong, am I?

  • edintexas

    The figures according to Boortz: Obama has developed 2 campaign contributors for every job in the private sector.

  • californiagold

    Here’s the game many of the economic shills on MSNBC and CNBC play….

    It’s called the game of exceeding expectations. For the past few weeks the gurus in the media have been lowering expectations for today’s job report, suggesting it would be around 75,000 net new jobs for July.(which is a pitiful number) When the estimated new number for July came in at 117,000, pro-Obama forces were exuberant, claiming the number far exceeded expectations. The problem with this type of thinking is that in a normal economic recovery, a typical average monthly jobs number should be between 200,000 to 250,000.

    Here are some of the details in July’s report….

    US Payrolls +117,000

    US Unemployment Rate 9.1%

    Participation Rate -.2 to 63.9% accounting for drop in unemployment rate

    Actual number of Employed (by Household Survey) fell by 38,000

    Unemployment rose by 156,000

    Those dropping out of the labor force rose by 374,000

    Civilian population rose by 182,000, Labor Force declined by 193,000

    Remember one important point here….. the unemployment rate changes based on the “household survey” not the reported headline jobs number, nor with the weekly claims data.

    What others have stated is true..the 9.1% unemployment rate is not accurate because it does not take into account the thousands and thousands of people who have given up looking for work and have dropped out of the labor force. If those people were included in the numbers, the actual unemployment rate would be somewhere around 12%.

    The point is, during the two and half years of Obama’s economic recovery, job creation is well below where it needs to be. Even Obama loyalists such as Paul Krugman have come to the conclusion that Obama’s economic policies are not yet working.

  • Adjoran

    Please note that the long-term unemployed who have “left the labor force” did not do so on their own. They haven’t necessarily stopped looking for work.

    Their unemployment benefits have expired and the Labor Department just removes them from the rolls. It’s that simple. So the size of the labor force is an important measure because it can show the unemployment situation the official statistics hide.

  • btpull

    During the campaign Obama stated he did not want an economy that goes threw the boom to bust cycle. Instead he has created an economy that goes from bust to bust – campaign promise fulfilled.