Free Markets, Free People
This is one of those cases where the headline numbers and claims of new jobs are so totally out of step with reality, that it’s hard to believe how badly the banner numbers reverse the actual employment situation. In fact, I’d argue that this month highlights perfectly why the Bureau of Labor Statistics needs to thoroughly revise the way the Employment Situation is reported.
To understand why, let’s look at the “A” Tables of the Employment Situation report. Take a careful look at the “Employed” line in the table. Last month, there were (in thousands) 139,391 persons employed. This month, there were (in thousands) 139,061 employed. So, non-farm payrolls may have increased by 151,000 jobs, but there are 330,000 fewer employed Americans than there were last month.
The total civilian, non-institutional adult population, in thousands, was 238,530 this month. With the historical long-term trend rate of labor force participation of 66.2%, that means the actual size of the labor force should be 157,907. With only 139,061 persons actually employed, the real unemployment rate is actually 13.6%, up from 13.2% last month, and from 12.8% in May.
The current labor force participation rate of 64.5 is the lowest since November of 1984.
Essentially, the employment situation worsened last month, rather than getting better. The only reason it looks better is because so many people are just dropping out of the labor force. When they do so, they magically disappear from the official banner statistics.
What is actually happening is that job growth is not keeping up with population growth, so every month, real employment is declining. It’s nice to see that employers have added 151,000 payroll jobs, but that simply isn’t a rate that keeps pace with job force growth. To give you an idea of how this is working, since Oct 09, the civilian non-institutional adult population has increased by 1,980 thousand people, while at the same time, the number of employed has risen by 819 thousand. That means that there is a deficit of 1,161 thousand jobs that has built up over the last year.
The banner statistics of payroll jobs and unemployment rate are increasingly out of step with the true employment situation.