Nonfarm payroll employment rose by 155,000 in December, and the unemployment rate was unchanged at 7.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care, food services and drinking places, construction, and manufacturing.
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Between January 2008 and February 2010, the U.S. economy lost 8.8 million jobs.
Since the employment low in February 2010, nonfarm payrolls have expanded by about 5.3 million jobs. Of the 8.8 million jobs lost between January 2008 and February 2010, approximately 60.22% have been recovered (not accounting for normal demographic-related job growth).
In 2012, employment grew by an average of 153,000 per month, the same as the average monthly gain for 2011.
Once again, recall unemployment is based on the household survey.
Current Report Jobs
Average Weekly Hours
Average weekly hours have improved substantially but are still below where they were at the start of the recession.
Index of Aggregate Weekly Hours
The index of aggregate hours paints a good picture of the stall in the recovery. Employment is up, but hours are not up proportionally.
Average Hourly Earnings vs. CPI
Average hourly earnings has been falling for years and lagging CPI inflation since September 2009. Simply put real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly.
The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.
The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total.
The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.
Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.
Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.
Birth Death Model Adjustments For 2011
Birth Death Model Adjustments For 2012
Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.
In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small.
In the last year, the civilian noninstitutional population rose by 3,766,000. Yet the labor force only rose by 1,566,000.
Those "not" in the labor force rose by 2,199,000 to 88,839,000.
The massive rise of those "not" in the labor force is primarily economic weakness, not demographics. Actually, older workers are returning to the work force because they cannot afford retirement. One look at the average age of Walmart greeters and those working in fast food restaurants tells a story itself.
Decline in Labor Force Factors
Discouraged workers stop looking for jobs
People retire because they cannot find jobs
People go back to school hoping it will improve their chances of getting a job
People stay in school longer because they cannot find a job
Were it not for people dropping out of the labor force, the unemployment rate would be well over 10%.
Part Time Status (in Thousands)
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There are 7,918,000 workers who are working part-time but want full-time work. This is a volatile series.
BLS Alternate Measures of Unemployment
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Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said "better" approximation not to be confused with "good" approximation.
The official unemployment rate is 7.8%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 14.4%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Duration of Unemployment
Long-term unemployment remains in a disaster zone with 39% of the unemployed in the 27 weeks or longer category.
Grossly Distorted Statistics
Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.
Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.
Last month shows pronounced weakness in the underlying numbers, this month was weak again.