A look at US employment – and how’s that recovery doing?

Summary:  a look at the US labor force.  The numbers tossed around in the news media give little perspective on the scale of the problem.  This downturn acts as a massive engine concentrating America’s income and wealth in even fewer hands. The extension of the Bush tax cuts, which benefit mostly the wealthy, will boost this trend.

From last month’s post:   “The obvious conclusion: the Democratic Party is toast in the November elections if employment does not improve soon.”   And so the Obama Administration earned its defeat by its slavish love of banks and cavalier disregard for unemployed workers.


  1. The Recovery!
  2. The Current Numbers: October 2010
  3. For more information

(1)  The Recovery!

Wall Street and the media obsess over the tiny changes in the monthly employment reports.  These surveys are not that accurate, and changes of a few thousand mean nothing among 300 million Americans.  Instead we should watch the levels and trends.  What improvement in jobs has this recovery brought us since it started in June 2009?  Here are the results for the past 12 months (October 2009 – October 2010, seasonally adjusted, in thousands):

  • Civilian non-institutional population 16 or older:  +0.8%
  • Employed:     +0.6%  (corrected value)
  • Unemployed:  down 4.9%  (mostly though people dropping out of the labor force)
  • Not in the labor force (neither working nor looking):  +2.3%

As your teachers said, always check our conclusions with different methods.  First, look at the Social Security employment taxes in September:  down 2.8% year-over-year.  This is a reliable measure of American wage income.  Payments by social security rose 3.0%, so its cash flow dropped from -4.4 billion to -7.5 billion.  Cash flow was +7.2 billion in September 2006; this deterioration is a growing and serious drag on the Federal government’s finances.

Second, look at new claims for unemployment:  stable since late December 2009 at roughly 463 thousand/week.  That’s job losses at an annual rate of 24 million per year.  Only about 80% of workers are covered by UI (no independent contractors and self-employed), and the unemployment rate is higher for uncovered workers.  So the job loss rate is probably running at about 30 million/year.  This shows considerable stress on the US economy — and on US households.  Most of the newly unemployed find a job, but often with some combination of lower wages, less benefits, and fewer hours.

Do we have a recovery?  Not in jobs.  Not in wages.  A wide range of economic data suggests that the recovery stalled in May and June 2010.

(3)  The Current Numbers:  October 2010

Some aspects of employment are leading indicators, some are lagging indicators.  Broadly speaking, employment is one of the major metric’s of the nation’s health, both economic and social.

These are the numbers from the Census’ Household Population survey (tables A and A-1) for October, released 5 November 2010.  IMO the household survey gives a more reliable real-time picture than the establishment survey (CES).  After the benchmark revisions, 18-plus months later, the CES provides the definitive historical record.  Unfortunately, the initial results bear only a slight resemblence to the final results.  They’re largely modeled from a few early responders.  And the early responses do not include small businesses, the center of the current downturn. 

Here’s the story for October.  All rounded to the nearest million.

  • 239 million – the civilian non-institutional population, adults 16+ years old (17 million are 16-19 years old).
  • 154 million of these are in the labor force (6 million are ages 16-19). 
  • 139 million have jobs (4 million are ages 16-19)
  • 27 million of those jobs are part-time jobs; 9 million of those with part-time jobs would prefer full-time jobs.
  • 15 million of the labor force are unemployed:  1 million  quit, 9 million were fired, 5 million entered or re-entered the labor force (2 million are ages 16-19).
  • 1 million have become discouraged and stopped looking.

The Census provides six measures of unemployment, depending on definitions of the labor force and unemployed.  The four most widely used (U-3 to U-6) range from 9.6% to 17.0% (table A-15).  All have been stable since June.  None of these measures are more “right” than the others.  None are easily comparable to those of the great depression (the government began measuring unemployment in the 1940′s; earlier numbers are rough estimates).

The median duration of unemployment is 21 weeks; the mean is 34 weeks (table A-12).  The mean is large due to the six million workers who have been unemployed for 27 weeks or more.  The level of long-term unemployment during this downturn is a post Depression high .

Much has been made of the declining ratio of workers to population.  For example, the fraction of men over 16 who have jobs is a post-Depression low.  Get used to it.  This ratio can only fall further as the boomers age.

Other posts about employment

  1. America passes a milestone!, 20 January 2010 — More jobs in government than manufacturing
  2. Yes, it is a “mancession”, with men losing more jobs than women. Just like all recessions., 5 October 2009
  3. Update on the “mancession”, 2 December 2009
  4. A look at the engines of American job creation, 12 January 2010
  5. An ominous trend: number of Americans working for the government vs. those making things, 5 March 2010 — Update to the Oct 2009 post.
  6. The coming big increase in structural unemployment, 7 August 2010
  7. The coming Robotic Nation, 28 August 2010
  8. The coming of the robots, reshaping our society in ways difficult to foresee, 22 September 2010
  9. Economists grapple with the first stage of the robot revolution, 23 September 2010

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