Needless to say, administration supporters will be touting that the unemployment rate released by the Bureau of Labor Statistics this morning dropped from 9.8% to 9.4%. Politically, this is good news for Obama, at least in the short run.
Dig just a bit deeper, and you will see that 0.2% of that drop (or half the total drop) was from a decrease in the “participation rate” from 64.5 to 64.3 of the population. So half of the good news reflects that people have dropped out of the work force and have given up looking for work.
To put this in context, I ran a chart from the BLS website historical statistics database, showing the participation rate over the past 20 years, which shows that we are at a 20-year low:
The other disheartening statistic is reflected in the chart combining the unemployment, marginal and discouraged workers (in short, everyone who is not working but currently or at one time wanted to work, or who is employed part time because full time work was unavailable). Combine all those and the total is 16.6% up from 16.3% November not seasonally adjusted (seasonally adjusted it is 16.7% down from 17%). This is the highest number since 1994 (first year data available):
Here are two other charts showing the depth of the problem. The first shows the average length of unemployment (in weeks) and the second the median length of unemployment:
While the drop in the unemployment rate from 9.8% to 9.4% is good political news, it’s hard to see any real improvement below the surface.
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Comments
I also wonder how, after such a prolonged period of high unemployment, the true rate is impacted by (and the measured rate fails to reflect) the fact that many younger folks are coming out of school never held a full time job and are unable to apply for unemployment benefits, and may not be measured.
Surely the overall unemployment rate uses the weekly application for unemployment benefits metrics somehow, no?
So do unemployment numbers fail to reflect both long term unemployed who have dropped off the radar screen when their benefits ran out, as well as younger never-employed and ineligible for benefits?
Seems as if our metrics leave a lot to be desired.
Isn't that 2% within the margin of error? (In other words, meaningless?)
I realize there are always new people coming into the workforce, but I believe you are only eligible for u/e benefits if you've lost your job (and probably only for layoff, not fired for cause).
How do they keep laying off hundreds of thousands of people? Haven't companies been dropping workers for a couple of years now? Shouldn't they have run out of workers to prune by now? This has been a very stubborn downturn. One begins to sense that government policies may not have been helpful.
Isn't it great to have someone like Prof. Jacobson to give us real facts and information unlike the blather and pap that is peddled by the blow-dryer and TelePrompTer dependent, vapid and vacuous faux "journalists" who are supposed to be performing this service?
He's doing a job Americans won't do, and I don't think he's an illegal alien!
@Anil, it's not a random survey, exactly, so I don't think there's any real confidence interval or margin of error. Possibly there's a surrogate, but these percentages are mostly useful for comparison purposes anyway.
And I suspect that we're entering another 'age' much like the late 1800s in which long-time 'jobs' vanished never to return.
I know 'coal-mining families' in Southern IL who still think shaft mining jobs will return, after 40 years. I think they're wrong.
So, the problem is, how do we prepare people for the jobs that will be out there, or will we end up like, say, France, where 10% unemployment and relatively generous benefits for the unemployed are the norm?
In fact, I don't trust French UE numbers [not just because they're French] because they apparently don't count a lot of people we would, like those students who string out the undergraduate career until they're 30 or so.
We need new job creation, not callbacks to old, outdated jobs. Sorry UAW.
It's worse than half, actually, unless I misunderstand the numbers.
An unemployment rate of 9.8% of a participation rate of 64.5% of the population represents 6.321% of the population.
An unemployment rate of 9.4% of a participation rate of 64.3% of the population represents 6.044% of the population.
The total difference, in terms of overall population percentage then, is 0.277%, of which 0.2% (or almost three-quarters) is no longer being counted. To perhaps help it make more sense, if those 0.2% that are no longer participating still were, then the population unemployment rate would be 6.244% instead of 6.044%, and the calculated rate would be 9.68%.
Another interesting way to look at the numbers is to use the B tables, which show jobs by Industry. Using seasonally-adjusted numbers:
For the 12 months of 2010, there were 1,346,000 private sector jobs added. Of those, a mere 135,000 were goods-producing jobs. 1,211,000 were service-providing jobs.
Within the service jobs, the growth (in numbers of jobs) areas were:
Healthcare & social assistance: 341,800
Temporary jobs…………….: 308,400
Leisure & Hospitality………: 240,000
Retail Trade………………: 115,700
If we look at the percentage growth in jobs by Industry, we see Temporary Help Service jobs grow by an astonishing 15.7%.
I see the growth in temporary jobs as a worrying sign: employers are still reluctant to take on permanent employees, probably because of the overhang of uncertainty due to government spending, regulation, and Obamacare.
If enough people give up looking for work, the unemployment number will drop to 0%, and then everybody will have a job.