Friday, January 8, 2010

The have's and the have not's

The Bureau of Labor Statistics (BLS) released their results for December's unemployment survey. These numbers will be revised a couple of times still. They get data from "household" surveys and from "establishment" surveys. The household survey is where we learn about the people who want to work and are not able to find employment. Here are some comments on the current conditions...

From the BLS
Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was about unchanged at 9.2 million in December and has been relatively flat since March. 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-5.)

About 2.5 million persons were marginally attached to the labor force in December, an increase of 578,000 from a year earlier. (The 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-13.)

Among the marginally attached, there were 929,000 discouraged workers in December, up from 642,000 a year earlier. (The 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 had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

Because this data is not seasonally adjusted, the numbers are skewed to include people who are considered employed, though in seasonal work, such as Christmas retail.

Jon Talton, business reporter for the Seattle Times has found an interesting observation on the unemployment report. Here is part of his article...

More sobering data can be found deeper in the weeds of today's report: the number of discouraged workers grew by 661,000 -- people who have given up looking because jobs in their fields simply don't exist (like, er, newspapering). This drives the real unemployment, which also includes temps who want to work full-time, rate to at least 17.3 percent.

Heidi Schierholtz, economist at the Economic Policy Institute, says the recession has created 3.6 million of these "missing workers." Her assessment: "When the recovery begins to take hold and these missing workers start entering or reentering the workforce in search of jobs, it will put strong upward pressure on the unemployment rate."

I have yet to find a serious economist who expects us to make up the job losses of the recent lost decade for years -- between 2014 and 2017. And that outcome would be far different from the Great American Jobs Machine known through most of the last half of the 20th century. Our old nemeses of high debt, deindustrialization and trade imbalances are partly to blame. Companies are learning to work with fewer staff and continuing to offshore jobs. And, to beat a dead horse out of necessity, restarting bubbles in housing, etc., won't work.

One of the reasons to keep a close watch on the employment condition in our economy is because there is a close link to how people spend and how they view their income security. These reports clearly illustrate that people who do not have a job are becoming increasingly discouraged. When I talk with people I am in contact with about their outlook for this year and beyond, those who have employment or are not working by choice, they are optimistic to some degree. The consumer feeling comfortable about spending is the end result we want to create in our economy, whether it's right or wrong, that's where we are going. It worked in the past and were going to make it work again. The road there is no longer smooth and surprises must be expected. And until the end of the journey can be foreseen, we should not expect treasured assets to recover the economic value we once placed on them.
The BLS comments also describes the sectors where employment is generally improving. They said...

Temporary help services added 47,000 jobs in December. Since reaching a low point in July, temporary help services employment has risen by 166,000.

Health care employment continued to increase in December (22,000), with notable gains in offices of physicians (9,000) and home health care services (8,000). The health care industry has added 631,000 jobs since the recession began.