More Americans quit looking for work

Fri Sep 6, 2013 - PressTV

 

A disappointing jobs report in the United States shows a large drop in the share of Americans who are either working or looking for work.

The nation's jobless rate was 7.3% in August, down slightly from 7.4% in July, the Labor Department said Friday in its monthly employment report.

But that small improvement was mostly the result of discouraged jobseekers who have given up looking for work. People who are not actively looking for employment are not considered as unemployed.

Some 312,000 people stopped looking for work in August, pushing the labor force participation rate to 63.2 percent, the lowest since 1978.

The labor force participation rate measures how many healthy, working-age people 16 and older are working or looking for jobs.

The participation rate has been declining for years because millions of Americans have quit searching for a job, a result of the weakest economic recovery since the Great Depression.

Meanwhile ,employees in the United States continue to express elevated concerns about their job security nearly five years after the global financial crisis.

The poll shows that millions of US workers are still worried about having their benefits and wages reduced, their hours cut back, and being laid off.

Moreover, most of the jobs created during the sluggish economic recovery have been part-time jobs in low-paying industries like retail stores and restaurants.

Such jobs leave consumers with less money to spend than do better-paying positions in industries such as manufacturing and construction, which have mostly shed jobs the past four months.

Fewer Americans Will Work: What That Means for the Economy

By Christopher Matthews, TIME Magazine

July 22, 20130

With last year’s presidential election so focused on jobs and the economy, the American public probably knows more about the nuances of the unemployment rate than they ever have before. One particular of the official unemployment rate that received attention last year is that the Labor Department counts someone as unemployed only if he or she is actively looking for employment. Other folks who, for whatever reason, aren’t searching for work are considered not in the labor force.

The ratio between those considered in the labor force and the total working-age population is known as the “labor-force-participation rate.” And the reason why the unemployment rate has been able to fall from more than 10% in 2009 to 7.6% today despite middling job growth is that more and more Americans are dropping out of the labor force altogether.

As you can see from the chart below, this decline in the labor-force-participation rate is a trend that’s been going on for many years now. The primary driver of the overall trend is the aging workforce — many of those dropping out are simply retiring at around the normal age. But the trend accelerated during the recession, suggesting that many more people dropped out of the workforce than otherwise would have if the economy were in better shape.

As the economy improves, however, should we expect to see the participation rate bounce back? According to new analysis from Macroeconomic Advisers, it’s not likely. They estimate that roughly 45% of the recent decline in labor-force participation is a result of a weak economy, and the rest because of demographic factors. But as the economy improves, the workforce is going to continue to age, meaning that by 2015, when the Federal Reserve expects the economy to be back near full employment, the participation rate will remain where it is today.

In one sense this is good news because the economy doesn’t need to produce as many jobs per month to see reductions in the unemployment rate. But on a deeper level, it’s evidence that the high labor-participation rates that helped spur economic growth from the 1970s through the 1990s is a thing of the past. To put it another way, our economy is going to have to produce more with fewer people going forward, which — all else being equal — will slow economic growth.

So just how big of an effect will a smaller workforce have on the economy? In 2011, Harvard University’s Program on the Global Demography of Aging published a paper that tried to understand this question. Logic suggests that a workforce that has to support fewer nonworking individuals will be wealthier overall, and the study bears out that hypothesis. In the paper, economists David E. Bloom, David Canning and Günther Fink estimated how high-income countries (most of which have aging populations) would have grown from the 1960 to 2005 period if they had experienced population growth similar to the projections for 2005 to 2050. According to the report, if a high-income country like the U.S. had a per-person income of $10,000 in 1960, that income grew to $34,600 under the population growth we actually experienced. On the other hand, if the 1960 to 2005 period experienced the sort of population growth that we’re expected to see through 2050, that income would have grown only to $25,500.

This huge difference underscores how important population growth and workforce participation is to a country’s economy. If there are more people working in a country, and if a higher percentage of those people are productive, the whole country will be richer. (This is one reason why economists tend to support policies that increase immigration.)

Delusions of Economic Recovery

Inside the Latest Jobs Report
by PAUL CRAIG ROBERTS


Dave Kranzler of Golden Returns Capital declares the April payroll jobs report that was released on May 3 by the Bureau of Labor Statistics to be “fictitious.”

Statistician John Williams, of shadowstats.com, says both the jobs report and unemployment rate are “nonsense.”

I agree with both. But don’t expect the financial press to report the facts.

Let’s take a walk through the BLS report and you can arrive at your own conclusion.

The BLS report says that the private sector created 185,000 service jobs in April. Even if this report were true, it would have negligible effect on the unemployment rate as about 127,000 new jobs are needed each month just to stay even with population growth and current unemployment rate.

But is the BLS report true?

We can answer that question by examining the areas where the jobs reportedly materialized:

• 29,300 in retail trade with general merchandise stores accounting for about half of that number,
  
• 73,000 in professional and business services with temporary help services accounting for 42 percent of that number,
  
• 26,100 in health care and social assistance with ambulatory health care services accounting for 52 percent of that number,
  
• 45,100 in accommodation and food services with waitresses and bartenders accounting for 84 percent of the jobs,
  
• and 8,600 jobs created for bill collectors.
  

That’s it. The federal government lost 8,000 jobs, the postal service lost 4,900 jobs, state government lost 1,000 jobs and local government lost 2,000 jobs.

There were zero jobs created in manufacturing.

Considering the credit-restrained and hard pressed consumer, the jobs figure for bill collectors is likely correct. But why would there be 29,000 new jobs in retail trade when real retail sales are falling? Why would there be new professional service jobs when large consulting companies such as IBM are reducing the hours of their contract employees? How can 38,000 waitress and bartenders be hired in one month when consumers have so little discretionary income?

Notice, too, that the BLS reports that 6,000 construction jobs were lost in April. Yet, the financial press is full of reports of “housing recovery.”

You know those thousands and thousands of fracking jobs that the fracking industry has been hyping so that communities, desperate for jobs, ignore the destruction of their surface and ground waters? Well the BLS report shows that oil and gas extraction jobs, which includes normal oil and gas recovery, peaked in February. Only 900 jobs were created in April, a small reward for destroyed aquifers and surface streams. People who live in fracking areas have been warned to open their windows when showering to avoid being asphyxiated because of the methane in the water and to not be surprised if their water actually burns. There is no doubt that fracking because of its enormous external costs produces a net economic loss.

In America everything is hype for a buck. They will sell you any lie. And the bulk of the population, of course, can be counted on for falling for every lie.

In my opinion, the March BLS jobs report of only 88,000 new jobs, only 69 percent of those needed to stay even with population growth, undermined the Obama regime’s recovery hype and the stock market’s confidence in “recovery.” Even brainwashed Americans have learned that “jobless recovery” is an oxymoron. So the word was passed to the political appointee overseeing the BLS to avoid further embarrassments. However, like the old Soviet press, the professional staff delivered the required report in a way that undermined it. Goods-producing jobs are reported to have dropped by 9,000 and retail stores are being closed, so why are 100,000 new jobs needed in retail trade and professional and business services?

John Williams explains the deception in the unemployment rate reporting. The 7.5 percent reported rate (U3)is not the product of new jobs generated by a recovering economy. It is the result of discouraged workers who, unable to find jobs, give up looking and, thus, cease being counted in the work force. The real rate of unemployment when discouraged workers are counted as unemployed is 23 percent. You can see the truth of this in the collapsing labor force participation rate. The collapse in the participation rate is not the result of a return to the prosperity of my youth when one-earner families were the norm. It is the result of millions of Americans unable to find employment and no longer being counted in the labor force.

Just as the government lied about weapons of mass destruction in Iraq and is now repeating the lie about weapons of mass destruction in Syria, the government lies about jobs and the unemployment rate. What doesn’t the government lie about?

Anyone who thinks an economic recovery has been ongoing since June 2009 can cure themselves of the delusion by looking at this chart:

The Terrible Unemployment Figures of March 2013

by Robert Oak | The Economic Populist

The BLS employment report shows the official (U3) unemployment rate ticked down 0.1 percentage point to 7.6%, but not because people gained employment.   Instead the unemployment rate dropped due to less people participating in the labor market.  The labor participation rate just hit a record low, not seen since May 1979 when many segments of the population was still quite discriminated against in the workforce.   One cannot just blame retiring baby boomers for low labor participation rates  This article overviews and graphs the statistics from the Current Population Survey of the employment report.   Below is a graph of the official unemployment rate.

The labor participation rate dropped 0.2 percentage points to 63.3%, mentioned above.

The labor participation rate is at artificial lows, where people needing a job are not being counted.  A drop isn't good actually for it means that those who dropped out of the labor force are staying out of the labor force.  For those claiming the low labor participation rate is just people retired, we proved that false by analyzing labor participation rates by age.

The number of employed people now numbers 143,286,000, a -206,000 monthly decline.  We describe here why you shouldn't use the CPS figures on a month to month basis to determine actual job growth.  These are people employed not actual jobs.   In terms of labor flows, the employed has been static for the last six months, a decline of 42,000 employed since October 2012.  From a year ago the employed have risen 1.266 million, but bear in mind the noninstitutional population has also increased by 2.391 million during the same time period.  The statistics from the CPS generally vary widely from month to month.   Below is a graph of the Current Population Survey employed.

Those unemployed stands at 11,742,000, a decline of -290,000 from last month.  Below is the change in unemployed and as we can see, this number also swings wildly on a month to month basis.

The number of people counted as unemployed has also remained fairly static.  From a year ago the official unemployed as declined by -944,000. , For the last six months, the unemployed has dropped by -506 thousand people.  Yet from the employed levels we can see these people are going into not in the labor force instead of getting a job.   Below is a graph of the unemployed.

We want to show a historical graph of the unemployed going back to 1948.  This is just ridiculous.  The number of official unemployed stands at 11,742,000.  In November 1982, the unemployed was 11,938,000.  That is over 30 years ago, during the 1980-1982 recession, and the civilian noninstitutional population has increased by 76.3 million people since then.  Congratulations America, over five years past the official end of the recession the jobs crisis is still worse than it was during the height of the 1980-1982 recession.

Below is a graph of those considered employed, in maroon, scale on left, against those considered unemployed, in blue, scale on right, by the BLS methods.  It is only recently that the growth rate of the employed has exceeded the growth rate of the unemployed (the maroon line exceeding the blue line).

The civilian labor force, which consists of the employed and the officially unemployed, is now at 155,028,000.  This is a decline of -496 thousand from last month.    Notice in the graph below how many more people are in the labor force than at the start of the 2008 recession. Population increases every month and this post gives details on that increase, while this one describes BLS labor concepts as well as how many jobs are needed just to keep up with the increased population (.

It's fairly clear the American workforce is ending up in the not counted statistics.  Those not in the labor force now tallies to 89,967,000, an increase of 663,000 from last month.   Below is the change to show on a month to month basis, the CPS shows quite a bit of variance. We talk about the wild monthly CPS changes in this post.

Below is a graph of the civilian labor force, in maroon, scale on left, against those not in the labor force, in blue, scale on right.  Notice how those not in the labor force as a trend exceeds those considered employed and unemployed.  What we see is a never ending growing segment of the population that is considered neither employed or unemployed, i.e. not in the labor force, increasing, above the trend line of those who would be naturally dropping out, such as the retired and those in school. This is the god awful, terrible aspect of this report.  Once again we see a huge segment of the U.S. population that could be working or looking for work laying idle.  Not in the labor force does include retirees, yet clearly 663 thousand baby boomers did not just magically retiree in a month.

Those considered employed as a ratio to the total Civilian noninstitutional population stands at 58.5%, a -0.1 percentage point drop from last month.  This ratio hasn't been this low since August 1980, as shown in the graph below.   This implies there are many people who could be part of the labor force who are not anymore.

A huge problem with today's labor market is the gross number of working part-time generally.  There are a huge number of people who need full-time jobs with benefits who can't get decent career oriented positions.  Those forced into part time work is now 7,638,000, and drop of -350,000 from last month.  While still a hell of a lot of people are stuck with part-time hours who need full-time work, this is the best news of this month's unemployment report.  With less people working part-time, eventually businesses should have to hire additional workers (unless of course they offshore outsource to China and India).

Below is a graph of forced into part-time  work because they got their hours cut, graphed  as a percentage of the total employed.  Part-time due to cut hours  is known as slack work conditions and consisted of 4,906,000 people for March.  This is a decline of -230,000 from last month.   Below is a graph of forced part-timers due to slack work conditions as a percentage of the civilian labor force.  We think this graph is a recession economic indicator, and notice the slope matches strongly the gray recession bars of the graph.  The percentage of people in working part-time due to slack economic conditions has stayed extremely high since the start of the Great Recession, even though it is overall clearly on a downward trend.

U-6 is a broader measure of unemployment and includes the official unemployed, people working part-time hours because that's all they can get and a subgroup not counted in the labor force but are available for work and looked in the last 12 months.  Believe this or not, the U-6 alternative unemployment rate still leaves out some people wanting a job who are not considered part of the labor force.  U-6 declined a whopping -0.5 percentage points to 13.8%.  The reason for the massive drop in U-6 are the declines in part-timers shown above.

The long term unemployed, or those unemployed for 27 weeks and over, stand at 4,611,000 people.  This is a decline of -186 thousand from last month.  The long term unemployed are the crisis of our time and this figure just isn't decreasing and they are getting hired.  The long term unemployed are now 39.6% of the total unemployed and this percentage decreased -0.6 percentage points from last month.    Because we see such an increase in those not in the labor force, odds are we just saw more long term unemployed drop off the unemployed statistics radar instead of actually getting a job.  Behind this figure is economic devastation for 4.6 million people.

The marginally attached are people not in the labor force because they have not looked for a job in the last month, but have looked for a job in the last year. This number has ballooned since 2007 and not returned to pre-recession levels. The graph below is the number of people considered marginally attached to the labor force, currently at 2.326 million.

Discouraged workers are people, not counted as part of the civilian labor force, who not only want a job, but also looked for one in the last year.  These people aren't job hunting now because they believe there are no jobs out there.  Below is the graph of discouraged workers, currently at 803 thousand people and are a subset of the marginally attached.  Discouraged workers is kind of a baramoter for how the job market is perceived.

One of our favorite statistics from the CPS survey is how many people who are considered not in the labor force, want a job now.  It is a direct survey question from the CPS.  The survey asks people who are not being counted in the unemployment statistics and official unemployment rate if they want a job.  The number who answer yes currently stands at 6,722,000.  This is a 101 thousand person decrease from last month.   That's an astounding number of people not counted who report they actually want a job and roughly 2 million higher than before the recession.   This figure includes the discouraged workers and marginally attached, but is seasonally adjusted, unlike the above.

The average length of unemployment is now 37.1 weeks, an increase of 0.2 weeks from last month.  This still is an absurdly long amount of time to be unemployed and has stayed highly elevated for years, an uptick is not what we want to see.

The average duration is also so high due to the long-term unemployed, who clearly are having a hell of a time getting a job, many facing age discrimination. 

The median time one is unemployed, which means 50% of people have gotten a job in this amount of time, and is 18.1 weeks, an increase of 0.3 weeks from last month.. 

Those unemployed less than five weeks dropped by -203 thousand, those unemployed between five weeks and 14 weeks increased by 56 thousand and people who had been unemployed for 14 weeks to 26 weeks also increased 42,000.  As previously noted, the long term unemployed dropped by -203 thousand.  Yet do not let the decline in short and long term unemployed fool you into thinking the job market is picking up from these duration figures.  A drop in the unemployed does not necessarily mean they found a job.