Thursday, May 8, 2014

Jobs increase by 288,000 in April. Unemployment rate falls to 6.3%. But labor force falls sharply

by Meteor Blades for Daily Kos Labor

Calculated Risk
The Bureau of Labor Statistics reported the economy created a seasonally adjusted 273,000 new private jobs in April, and 15,000 new jobs in the public sector, the best overall gain since January 2012. The consensus of experts surveyed by Bloomberg earlier in the week had put expected new job creation at 215,000. Both full-time and part-time jobs are included in the total. The official unemployment rate fell to 6.3 percent, the lowest level since September 2008.

There were a couple of clouds over these significantly improved figures, however. The civilian labor force shed 806,000 people in April, a massive drop after rises in the three-month January-March period of 1.26 million. The employment-population ratio remained steady 58.9 percent. But the labor force participation rate fell to 62.8 percent, a 0.4 percent drop that returned it to its lowest level in 37 years.

The bureau's report always includes an alternative measure, U6. This calculation covers not just Americans with no job, but also those working part time who want full-time positions—the underemployed who are called "part time for economic reasons"—and workers who have looked for jobs in the past 12 months but not in the past four weeks. U6 fell from 12.7 percent in March to 12.3 percent in April. U6 does not include people who have not looked for work in the past 12 months.

Revisions changed the job numbers for February from 197,000 to 222,000 and for March from 192,000 to 203,000. That produced a three-month average of 238,000. At that rate, according to the Hamilton Project's Job Gap calculator, it would take until December 2017 to return to pre-recession employment levels at the same time as absorbing the people who enter the labor force each month.

The number of long-term unemployed who have been jobless for 27 weeks or more, fell to 3.5 million, 35.3 percent of all those accounted for who have no work.

The number of officially unemployed Americans fell sharply to 9.8 million. But there are the millions of discouraged workers not included in that count because they have left the workforce.

The payroll services company Automatic Data Processing had reported on Wednesday a seasonally adjusted gain of 220,000 private-sector jobs for April. ADP does not report on public-sector jobs and its estimated growth figures, despite a change in methodology in 2012, frequently aren't a close match with the BLS private-job figures.

Among other news in the April job report:

Demographic breakdown of official (U3) seasonally adjusted jobless rate:

African American: 11.6 percent
Latino: 7.3 percent
Asian (not seasonally adjusted): 5.7 percent
American Indian (data not collected on monthly basis)
White: 5.3 percent
Adult women (20 and older): 5.7 percent
Adult Men (20 and older): 5.9 percent
Teenagers (16-19): 19.1 percent

Duration of unemployment:

Less than five weeks: 2.45 million
5 to 14 weeks: 2.35 million
15 to 26 weeks: 1.53 million
27 weeks and more:  3.45 million

Job gains and losses in selected categories:
Professional services: + 75,000
Transportation and warehousing : + 11,300
Leisure & hospitality: + 28,000
Information: - 3,000
Health care: + 27,900
Retail trade: + 34,500
Construction: + 32,000
Manufacturing: + 12,000
Average weekly manufacturing hours fell 0.2 hours to 40.8 hours.
Average work week for all employees on non-farm payrolls remained at 34.5 hours.
Average hourly earnings for all employees on private nonfarm payrolls was unchanged at $24.31.

Here's what the seasonally adjusted job growth numbers have looked like in March for the previous 10 years.
April 2004: + 249,000
April 2005: + 363,000
April 2006: + 182,000
April 2007: +   78,000
April 2008: -  214,000
April 2009: -  684,000
April 2010: + 251,000
April 2011: + 322,000
April 2012: +   96,000
April 2013: + 203,000
April 2014: + 288,000

For some time now, the Economic Policy Institute has been keeping track of "missing workers." These people "who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted as unemployed if they are actively seeking work, these “missing workers” are not reflected in the unemployment rate."

EPI says there are currently 6.2 million of these missing workers. Here are two charts showing its findings:

The BLS jobs report is the product of a pair of surveys, one of more than 410,000 business establishments called Current Employment Statistics, and one called the Current Population Survey, which questions 60,000 householders each month. The establishment survey determines how many new jobs were added. It is always calculated on a seasonally adjusted basis determined by a frequently tweaked formula. The BLS report only provides a snapshot of what's happening at a single point in time.

It's important to understand that the jobs-created-last-month-numbers that it reports are not "real." Not because of a conspiracy, but because statisticians apply formulas to the raw data, estimate the number of jobs created by the "birth" and "death" of businesses, and use other filters to fine-tune the numbers. And, always good to remember, in the fine print, they tell us that the actual number of newly created jobs reported is actually plus or minus 100,000.