The Real Jobs Report: December 2013
Friday’s BLS Monthly Jobs Report for December is out.
Despite four strait month’s of solid nonfarm job growth and good economic indicators, total new job creation came in at only +74,000 in December. It’s the lowest in 18 months. Job creation was well below population growth. Economists had expected +193,000.
The official unemployment rate paradoxically dropped to it’s lowest level in 5 years! It fell from 7.0% to 6.7%. Why? Ans: The civilian labor force shrank by -347,000 in December.
The United States is in a jobs depression. The Great Recession of 2008 casts a long jobless recovery shadow. Drops in unemployment these days measure the depth of systemic joblessness as much as measuring job growth and economic recovery.
About 7 million working-age Americans have dropped out of the workforce and never returned.
The Rosy Administration Perspective
America’s resilient businesses have added jobs for 46 consecutive months
– Jason Furman, The Employment Situation in December,1/10/2014
President Obama’s White House Chairman of the Council of Economic Advisers, Jason Furman, fell back on old White House habits when describing December’s employment situation.
Furman proudly rattles off there has been 8.1 million new private-sector jobs created, yet never once mentions that in this bad economy there are still -1.2 million fewer nonfarm jobs in the United States today than in January of 2008. Nor does he mention that public-sector jobs have decreased by -830,00 because tax revenues in a poor economy have forced cuts in public spending.
He robotically added that “there’s a lot more work to do”, but doesn’t say what it is.
Furman doesn’t mention that the working age population of the U.S. has grown by 12.1 million since January 2008, yet the workforce has grown by only +874,000. What happened to the other 11.2 million Americans???
Extending Unemployment Benefits
Furman provides this graph in his employment situation report to support the Administration’s position that emergency unemployment benefits should be extended another year through 2014.
It compares short and long term unemployment rates; pre-recession to post-recession. Short-term unemployment levels have finally returned to pre-recession levels. Long-term unemployment, however, remains 2.5 times higher than before the recession.
He proves extended unemployment benefits are needed and should be approved by Congress.
He proves, after 5 years, the Administration’s job creation record for long-term unemployed has failed.
The gap between U-6 and the official rate of unemployment is the widest since the Bureau of Labor Statistics began tracking U-6 in 1994. That is disconcerting.
– Barron’s, “A Disconcerting Jobs Report“, 1/11/2014
Barron’s points out there is a widening gap between the U-6 unemployment rate (13.1%) and the widely reported “official” unemployment rate (6.7%).
U-6 includes everyone in the “official” rate, plus all marginally attached workers, plus the total employed part-time for economic reasons, plus all marginally attached workers. The wider the gap, the more economically depressed are the workers that have a job. December’s gap is the widest ever recorded by the BLS. It doesn’t even include workers who have dropped out of the workforce.
The labor force participation rate, at 62.8%, ties for the lowest seen in over 35 years. The rate is even worse than it looks since the labor force itself shrank by nearly -350K last month. The shrinkage should have made the rate go up!
Worst, though, is when able-bodied workers, after exhausting their UI benefits without finding jobs, just give up and drop out of the workforce. The BLS doesn’t collect dropout data so it is hard to determine just how many dropouts there are. It has to be inferred from data like:
- The number of workers “not in labor force” grew by +525,000 in December
- Population survey has -1.8 million fewer jobs today than on 1/1/2008
- Total nonfarm jobs has -1.2 million fewer jobs that on 1/1/2008
- The workforce eligible population grew by +12.1 million since 1/1/2008
- Labor Force Participation Rate is the lowest in over 35 years
- The Employment-Population Ratio is at its lowest since the early 1980s
Not everyone leaving the workforce is a dropout. A large number of them are baby-boomer retirees.
Many economists think the small number of jobs created last month is a statistical quirk. Others say bad weather or raising November’s jobs by +38,000 is the cause.
When taken on the whole over the last several years, though, a grim picture emerges. More and more American workers are disappearing from the workforce. The United States remains stuck in a jobs depression.
Of course UI benefits can and should be extended for those in need who can’t find work.
What is needed most, though, is a plan to create more jobs… NOW!