Finance
The Myth Of A Good Jobs Number
Look at these headlines!Job growth surges, jobless rate drops to 8.3 percent (reuters)WOW! Things really must be getting better! 243,000 jobs, 8.3% rate.
Unemployment rate falls to 8.3%; fifth straight monthly decline (LA Times)
Obama team trumpets good jobs numbers (USA Today)
US Jobless Rate Falls to 3-Year Low, Report Shows (NY Times)
Snap analysis: Job creation accelerates broadly (Reuters)
Or are they? Hmm.. well that all sounded good right? But what about the data behind those numbers? Things like labor force, participation rate, employment/population ratio... Shh.. those are too complicated for the newspapers and TV news! Besides, you're a good American right? Can't be talking things down in an election year!
Source:BLS.gov
HOUSEHOLD DATA
Summary table A. Household data, seasonally adjusted[Numbers in thousands]Category Jan.
2011Nov.
2011Dec.
2011Jan.
2012Change from:
Dec.
2011-
Jan.
2012
Employment status
Civilian noninstitutional population
238,704 240,441 240,584 242,269 -
Civilian labor force
153,250
153,937 153,887 154,395 - Participation rate
64.2 64.0 64.0 63.7 - Employed
139,330 140,614 140,790 141,637 - Employment-population ratio
58.4 58.5 58.5 58.5 - Unemployed
13,919 13,323 13,097 12,758 - Unemployment rate
9.1 8.7 8.5 8.3 - Not in labor force
85,454 86,503 86,697 87,874 -
So what really has happened in the past year? Well the civilian noninstitutional population rose 3.6 million. The civilian labor force rose 1.1 million. The participation rate FELL 0.5 percentage points. The employment to population ratio rose 0.1 percentage point to an abysmal 58.5%. Finally, those "not in labor force" rose nearly 2.3 million, an astounding 1.1 million in the last month alone.
So for the math challenged, the trick here has been to reduce the size of the labor force at a rate greater than the increase in number of persons employed. Presto chango you get a declining unemployment rate which makes the lede on every news report.
Of course, the reality is far different. What would the top line unemployment rate had been for Jan. 2012 if the participation rate were the same 64.2% as Jan. 2011? Hmm... 8.9%. How about if the participation rate were what it was in Jan. 2009 (65.4%)? 10.6%. Jan 2002 (66.2%)? 11.7% !
And of course, there is the other game that is played - seasonal adjustments. The fudge factor. One can avoid this too by looking at year over year unadjusted figures. For instance, Dec 2010/Dec 2011 and Jan 2011/Jan 2012. Using that method we have Dec'10 9.1%, Jan'11 9.8%, Dec '11 8.3% and Jan'12 8.8%
Splitting the difference, a drop of 0.9%. Wait.. did you say a drop? But...
The partipation rates also dropped - 0.3 pts Dec/Dec and 0.5 pts Jan/Jan. In fact, Jan 2012 is the LOWEST labor force participation rate in the past decade at 63.4%. This is reflected by the 2.6 million increase in 'not in labor force' over that same time frame. In fact, you must go back to pre-1984 to find similar rates. However, the trend at that time was upward from the 57.5 to 58.0% of the late 1940s to late 1960s when women were a smaller part of the work force. the peak at 66.1% in July 1997. On an annual basis 67.1% was the peak rate and ocurred in 1997-2000. From 2004-2008 the rate was 66.0. The other ratio, employment to population peaked at 64.4% in 2000 after spending the late 40s through 1970 either side of 56%. January 2012 saw this figure drop to 57.8%, last seen in 1983 and not far off from those Nifty Fiftie's rates.
Sorry to rain on the parade, but yes, things still really do suck.
