Free Markets, Free People


Digging into the March unemployment numbers

Not to make to much of them, but this is important to know when you hear some of what is going to pass for analysis today and this weekend.  Calculated Risk does a good job of drilling down into the numbers and giving them some context.

First, part timers.  The BLS reports:

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) increased to 9.1 million in 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.

Calculated Risk adds:

The all time record of 9.2 million was set in October. This suggests the increase last month was not weather related – and is not a good sign.

Again, while any gross positive number is better than a negative number, other areas of employment don’t necessarily support an outlook that says “the job picture is turning around”. As if to emphasize that point, Gallup’s “underemployment” numbers were released today as well and they increased to 20.3% of the US workforce is underemployed – up from 19.8% in February.

A second number to consider is those who’ve been unemployed for over 26 weeks and would work if a job was available:

According to the BLS, there are a record 6.55 million workers who have been unemployed for more than 26 weeks (and still want a job). This is a record 4.3% of the civilian workforce. (note: records started in 1948)

The number of long term unemployed is one of the key stories of this recession.

It is the highest number ever recorded since records started in 1948. The previous high was 2.5% in 1983.  And, as the cite points out, this is “one of the key stories of this recession” and one that isn’t yet showing signs of improving.

The Wall Street Journal points out:

A survey of private employers shows they shed 23,000 jobs in March in a sign that the labor market remains a mixed bag in an economy that is otherwise growing again.

The private-employer report, which came two days before the Labor Department issues its own, broader job report, was a disappointment to many who were expecting both measures to mark a turning point into positive territory.

Calculated Risk concludes:

Although the headline number of 162,000 payroll jobs was a positive (this is 114,000 after adjusting for Census 2010 hires), the underlying details were mixed. The positives: the unemployment rate was steady, the employment-population ratio ticked up slightly (after plunging sharply), and average hours increased (might have been impacted by the snow in February).

But a near record number of part time workers (for economic reasons), a record number of unemployed for more than 26 weeks, and a decline in average hourly wages are all negatives.

Shorter version: Don’t put too much positive weight on this month’s numbers.

There is a lot that has to change in the markets in general before you’re going to see any significant change in the labor market. So when you hear the talking heads this weekend tell you that it is all turning around and it will be sunshine and roses from now on, take it with a grain of salt.

[Welcome Real Clear Politics readers]

~McQ

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16 Responses to Digging into the March unemployment numbers

  • [dense_rightie_pacification_mode=on]

    Yes, I worry about debt. And the numbers might be bad. Or they might not. But you have a valid concern. Entitlements are a problem. Even though I support more of them. And that’s not a contradiction, I’m just trying to see all sides. We need to control debt, and that means cutting spending. I’m disappointed that Obama hasn’t done that so far, though he said he would. But he probably will. If you thick righties concerned conservatives and libertarians will also admit that he’ll have to raise taxes too.

    See, I’ve agreed with you partially. Now will you please take me seriously again? Please? Don’t you want more of my analysis now?

    • I would like to believe that Obama will do the things he claims he will do but what evidence is there that he will?  As for tax increases why?  If spending goes down we do not need higher taxes.  Deficit reduction requires spending cuts and increased revenue from an economic recovery.  Tax increases will result in a recovery that lags longer and longer and that will result in higher deficit spending and more debt.

  • It’s funny to watch you suddenly do all you can to talk down the economy.  All good news can always be rationalized as maybe not so good, and all bad news can be analyzed to make it seem not so bad.   But looking at the trend, going from dramatic loses in 2008, then steady improvement from massive loses in December 2008, to smaller losses all through 2009, and now the best numbers in three years…well, that’s how it should look if things are getting better.   But you gotta admit, when Bush was President you’d find one way to read the economy, but with Obama as President you’ll always look for the worst possible interpretation.  Admit it.

    • [dense_rightie_pacification_mode=off]

      It’s funny to watch you suddenly do all you can to talk down the economy. Really, just because you quote numbers and graphs and stuff that show levels of problem worse than any since the Great Depression, it doesn’t really mean anything. All good news can always be rationalized as maybe not so good, and all bad news can be analyzed to make it seem not so bad. That’s part of the holy writ of post-modernism – the facts don’t matter, just the narrative.

      But looking at the trend, going from dramatic loses, or maybe losses, I get confused, in 2008, then steady improvement from massive loses in December 2008, to smaller losses all through 2009, and now the best numbers in three years… well, that’s how it should look if things are getting better. And I don’t have to find any links that show we’ve got the best numbers in three years. I just have to assert it, and you have to accept it, because of my advanced degrees and stuff. That’s my analysis, which is totally different from mere opinion by virtue of flowing from my godlike powers of political science.

      But you gotta admit, when Bush was President you’d find one way to read the economy, but with Obama as President you’ll always look for the worst possible interpretation. Admit it. And don’t start up with all the times you guys criticized Bush’s spending and his TARP bailout, just don’t start! That doesn’t count. You guys have always been, like, Bush bad, Obama good. I decree it. Because you’re dense righties, and you can’t see things with any more nuance than that. Admit it.

    • Who is writing your posts, Scott? Ott Scerb?

      It’s true, right? Admit it.

  • How many of the 114,000 jobs (against the 420,000 new unemployment claims, announced two days earlier) were part-time or minimum wage jobs? Without supplying more detail, the numbers don’t tell us anything.
    And Scott, remember how during the Bush years, ONLY 100,000 new net jobs created was proclaimed by the Lap Dog media as proof of the failure of the Bush economy. Same thing under Reagan, where Carter proclaimed all the jobs created under Reaganomics were “burger flippers”, but further analysis showed the Reagan years was the birth of the high-paying “knowledge” economy, whereas the Carter years was the expansion of the “burger flipper” economy.
     

    • All valid questions.  However, this looks like the start of job growth which one would expect after an economic stimulus.  I do expect it to continue, but with two caveats: 1) structural unemployment will be much higher than the very low levels we had in the last two decades; and 2) the uptick is not a return to ‘normalcy’ as defined in the last few decades.  The structural imbalances in the US economy are so serious that if major changes are not made, by 2014 or so we’ll find ourselves back in the crapper.   A government stimulus can almost always create short term growth.   The key will be to make some painful choices when that growth occurs to create a sustainable economy.   This will be a real test of Obama.  By late 2011 he’ll maybe see good economic numbers and a surge in popularity.  It’ll be tempting to ride that to victory in 2012.  But if he does that, he won’t be starting to make the necessary adjustments, perhaps unpopular, to US economic policy that need to be made.  Will he simply choose re-election, or will he make tough choices?  If he chooses the former, I promise I’ll be very critical.

      • “this looks like the start of job growth which one would expect after an economic stimulus.”

        Or which one would expect after the bottoming out of a recession, even without a stimulus. 

        • Here’s the problem, timactual: in 1980 PRIVATE debt was 50% of GDP.  By 2008 that reached 100%.   That’s private, not public debt.   That is because of an unsustainable run up on consumption which fed a bubble economy.   That collapsed in 2008.   It is not going to be easy to get back to a sustainable economy, it’s definitely not something that will magically happen if we just leave it to markets.   Obama’s stimulus was necessary to start some growth so we could work to fix infrastructure and shift towards production and handle a long term decrease on credit-driven consumption.   It was also the easiest step — the restructuring will be much more difficult.   People bought the “wealth effect” illusion, stopped saving, and now we are seeing the consequences.   Thirty years of economic conventional wisdom is being scrapped, and that’s hard for some people to truly grasp.   But without the stimulus, you’d not even be back to positive job growth yet.

          • I agree with the numbers and your concern about them.  I disagree with the cause and subsequent cure for the high private credit to GDP ratio.  The cause is a stagnant growth in GDP and an erosion of personal earnings in real terms.

            Because the nation no longer manufactures, produces agricultural products, mining production, oil and energy production, and other red neck, sweaty socks production, our GDP growth has been slipping on a steady basis.  Only financial products and investments attracted foreign capital. 

            This slippage translated into income stagnation with no real growth in the industries that serviced wealth.  Service industries typically top out at 20% gross earnings cost of goods sold of the sale dollar for their service.  Industrial profit can reach 500% of cost of goods sold.

            The lack of wealth brought about by our volunatry de-indusrtialization caused our fall in relative incomes.  In a vain attempt at maintaining wealth, working couples borrowed against their future earning and/or the future value of their real estate and retirement funds.

            That’s the cause of the problem.  The cure is a renewed committment to low cost energy production for industrial use, renewed allocation of resources for agricultural resources such as water for irrigation, and renewed committment to making industrial output economically feasible.

            So this problem existed prior to both Bush and Obama Presidencies but it appears as though Obama will either accelerate the economies push to spin us into 3rd world status or at least he will not reverse our decline.

  • To Bethany Bill, I think you make excellent points.  But I’m not sure why you think Obama will push us into third world status.  Perhaps I’m hoping to much that he’ll push for the same things you call for you in your next to last paragraph?  Maybe you’re right, but I hope Obama recognizes that the times call for a real move towards production — because I agree with your overall analysis.

  • So far the recovery has been the weakest we’ve experienced in 30 years. From a historical perspective we should expect to see a significant turnaround based on how far we plunged, but instead it continues to be a mixed bag. There are multiple reasons for this but public policy certainly has a role to play and the policies of this Administration and Congress, combined with its frequent anti-business rhetoric and lack of a clear vision investors can rely on, has done a fair deal to keep the economy on an uphill climb.

    • Total PRIVATE debt was 50% of GDP in 1980, now it is 100% of GDP.   Debt to income was 40% in 1950, now it’s over 120%.  The fact of the matter is that we just end an era of debt-driven growth and illusionary wealth.   As I discuss in my own blog today (April 5), we cannot go back to the heady days of 2006, the ‘something for nothing’ prosperity of the last decade was based on lots of debt.   To get a sustainable economy will take years, and require not only restructuring, but a culture shift away from consumerism.

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