By Hugh, who is a long-time commenter at Naked Capitalism. Originally published at Corrente. A complete archive of Hugh’s reports can be found here.
The short version:
Seasonally adjusted, June was not a bad month for jobs, and with the revisions to April and May, job creation has been near 195,000/month for the last three months. However, we need about 90,000 a month to keep up with population growth. So we are talking about 100,000 a month over and above population growth. And we are still some 2.3 million jobs below the November 2007 peak in jobs. So it would take us nearly two years of such growth to get back to where we were 5 1/2 years ago.
And then there is the ongoing crisis in the quality of American jobs. 2/3 of jobs are being created in retail trade, and the leisure and hospitality sectors. These jobs pay poorly. At the same time, leisure and hospitality jobs are heavily part time. Overall, job hours remain largely static and wages are either stagnant or falling slightly behind, despite a low inflation rate.
In real unadjusted terms, June sees a good increase in employment and an even larger increase in unemployment. This is due to the end of school and the influx of students, teachers, and staff looking for work as well as the effects of good weather on employment and employment seeking.
Full time employment fell in June, and involuntary part time employment increased. Voluntary part time work fell markedly but this was seasonal and expected. It is too early to tell, but this month’s report is consistent with a conversion of 250,000 of full time to part time work. But this month’s data could still be a fluke. We saw a somewhat similar pattern in 2011.
My measure of real unemployment improved slightly in June with real trend unemployment hitting 12.4%, compared to the official 7.6% rate. My measure of real un- and under employment rose to 17.4%, affecting some 28.688 million Americans. This increase was largely due to the increase in involuntary part time workers.
Household/Employment Survey
Potential Labor Force
In June, the potential labor force as defined by the Civilian Non-Institutional Population over 16 (NIP) increased 189,000 from 245.363 million to 245.552 million. Multiplying this by the seasonally adjusted employment ratio for June (58.7%) gives a rough estimate of the number of jobs needed to keep up with population growth: .587(189,000) = 111,000.
Labor Force
Seasonally adjusted (trend line), the labor force increased 177,000 from 155.658 million to 155.835 million. If you remember, last month it increased by 420,000. Trend line, the labor force tops out for the summer in June.
The real story is in the unadjusted data. The report for June reflects both good weather and the fact that school is out. This leads to a dramatic increase in the size of the labor force. Unadjusted (actual), the labor force grew 1.355 million from 155.734 million to 157.089 million. This follows an increase of 995,000 last month. Unlike the trend line, the actual labor force tends to top out in July, not just for the summer but for the year. However, the July increase will be much smaller than that we have seen over the last two months.
Participation Rate
The labor force participation rate is the ratio of the current labor force to the potential labor force. As a result, it echoes the changes we just saw. Seasonally adjusted, it increased just one-tenth of a percent to 63.5% while unadjusted it increased 0.5% to 64.0%. Just as a reminder, in terms of trends, the participation rate topped out under the Clinton expansion at 67.3% in January-April 2000. The rate fell following the 2001 recession but stabilized from late 2003 through 2008 at around 66%. Since 2008, following the meltdown, the participation rate has been in overall decline. The effect of baby boomers who first started hitting 65 in 2011 on this rate remains marginal. To date, almost all of the decline can be asribed to a single negative economic factor: not enough jobs.
Employment
Seasonally adjusted, employment rose 160,000 from 143.898 million to 144.068 million, as compared with 319,000 last month.
Unadjusted (actual), employment grew 409,000 from 144.432 million to 144.841 million, as compared to 708,000 in May. Unlike the labor force, unadjusted, summer employment usually peaks in June-July while the yearly peak occurs in October-November.
Employment-Population Ratio
Seasonally adjusted, the employment population ratio grew one-tenth percent to 58.7%. Unadjusted, it also rose one-tenth percent to 59.0%.
Unemployment
Seasonally adjusted, the ranks of the unemployed was essentially unchanged, growing 17,000 to 11.777 million.
However, because of the traditional influx of students and others into the labor force in June, unadjusted, actual unemployment grew 946,000 to 12.248 million.
Unemployment rate
Seasonally adjusted trendline unemployment, the signature unemployment rate, was unchanged at 7.6%. Unadjusted, it jumped 0.5% to 7.8%.
Analysis
The first half of 2013 is looking much like a repeat of the first half of 2012. The employment-population ratio has held steady for the last 6 quarters but remains below its pre-recession levels. Unemployment has declined but this has been largely the result of continuing declines in the participation rate.
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Full Time vs Part Time Employment
Seasonally adjusted, full time employment (35 or more hours/week) declined 240,000 to 115.998 million. It increased 306,000 in June 2012 but decreased 406,000 in June 2011. Part time employment (1-34 hours/week) increased 360,000 to 28.059 million. In June 2012, it declined 193,000, and in June 2011, it increased 207,000.
Unadjusted, full time employment increased 747,000 to 117.400 million and part time employment declined 347,000 to 27.442 million
Involuntary vs. Voluntary Part Time Employment
Seasonally adjusted, involuntary part time workers (those who would work full time if they could) rose 322,000 to 8.226 million.
Unadjusted, this group increased 822,000 to 8.440 million. Generally, there is a big increase in the number of involuntary part time workers in June, but not this big. In June 2012, the increase was 557,000, and in June 2011, it was 468,000.
Seasonally adjusted, voluntary part timers increased 110,000 to 19.044 million. Unadjusted, they dropped 1.384 million to 17.931 million. A June cliff dive in these numbers is expected. In June 2012, the drop was 2.040 million. In June 2011, it was 1.301 million.
Analysis
The question has arisen whether employers are converting full time workers into part time workers to avoid extending healthcare coverage to them under Obamacare. The answer is it is too early to tell. There is no trend. The June numbers on full and part time workers could be read to support about a 250,000 increase in part time workers due to Obamacare, but this could also be normal variation or due to other factors. [Hugh adds (revised): “Adjusted, full time employment fell in June, and involuntary part time employment increased. Unadjusted, full time employment rose and part time employment fell, the opposite of the adjusted picture. So while involuntary part time workers increased, supporting the Obamacare flight theory, the overall full employment/part time employment disagreed with it in actual terms but agreed with it in trend terms, –if that’s not too confusing. Voluntary part time work fell markedly but this was seasonal and expected. It is too early to tell, but this month’s report is consistent with a conversion of 250,000 of full time to part time work. But this month’s data could still be a fluke. We saw a somewhat similar pattern in 2011.” –lambert]
The U-6
The BLS’ broader measure of un- and under employment, the U-6, jumped, seasonally adjusted 0.5% to 14.3%. Unadjusted, it shot up 1.2% to 14.6%.
Seasonally adjusted, the U-6 is composed of 11.777 million unemployed, 8.226 million involuntary part time workers, and 2.582 million of the marginally attached (those who have no job but looked for work in the last year but not the last month; an increase of 418,000), or 22.585 million total, an increase of 757,000 from last month.
[Standard note]
The BLS has a restrictive, though internationally recognized, definition of unemployment, that is without a job but have looked for one in the last 4 weeks. The marginally attached are not counted as part of the labor force and their use in the U-6 is an indication that this is what the BLS considers its functional undercount to be.
The BLS also has a more extended category: Not in Labor Force, Want a Job Now (seasonally unadjusted). In June, this decreased 41,000 to 7.152 million.
This category, however, does not usually reflect well actual movements in the economy. So I have developed a simple alternative to it. I calculate the size of where the labor force should be by multiplying the potential labor force of the NIP by a participation rate characteristic of a solid economic expansion (67%). The difference between this and the current labor force measures the size of the real BLS undercount, those who do not have jobs but would work if jobs were available to them. This then allows me to recalculate where real unemployment is and where real un- and under employment (disemployment) is.
.67(245.552 million) = 164.520 million (where the labor force should be)
Trend Undercount:
164.520 million — 155.835 million = 8.685 million, a decrease of 50,000 from May
Current Undercount:
164.520 million — 157.089 million = 7.431 million, a decrease of 1.228 million
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Real Trend Unemployment (that is seasonally adjusted) :
11.777 million (U-3 unemployment) + 8.685 million (undercount) = 20.462 million, down 33,000
20.462 million / 164.520 million = 12.4%, down 0.1%
Real Unemployment Now (i.e. seasonally unadjusted) :
12.248 million (U-3 unemployment) + 7.431 million (undercount) = 19.679 million, down 282,000
19.679 million / 164.520 million = 12.0%, down 0.1%
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Real Trend Disemployment:
Real Trend Unemployment + involuntary part time workers seasonally adjusted = 20.462 million + 8.226 million = 28.688 million, up 289,000
28.688 million / 164.520 million = 17.4%, up 0.1%
Real Disemployment Now:
Real Unemployment Now + involuntary part time workers seasonally unadjusted = 19.679 million + 8.440 million = 28.119 million, up 540,000
28.119 million / 164.520 million = 17.1%, up 0.3%
Analysis
Real trend numbers were little changed in June. Real unemployment now for June showed offsets between increased unemployment and a decreased undercount. Real disemployment now got worse due to the jump in involuntary part time workers.
Other
The number of long term unemployed (6 months or more) was little changed at 4.328 million, a decrease of 29,000. The long term unemployed account for 37% (unchanged from May) of the U-3 unemployed.
White unemployment improved slightly, decreasing one-tenth percent to 6.6%. White teen unemployment dropped, 1.2% to 20.4%. African American unemployment increased 0.2% to 13.7%. African American teen unemployment increased 1.% to 43.6%.
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Establishment/Business/Jobs Survey
Jobs
Seasonally adjusted, jobs increased 195,000 in June to 135.902 million. This represented an increase of 202,000 jobs in the private sector to 114.051 million, and a loss of 7,000 in government to 21.851 million. After being revised down 16,000 last month, the April jobs number was revised up 50,000 this month to 199,000. The May number was also revised up 20,000 to 195,000.
Unadjusted, jobs increased 422,000 to 136.805 million. Private sector jobs increased 856,000 to 114.998 million and government jobs decreased 434,000 to 21.807 million. 364,000 were jobs lost in education at the local level (mostly due to the end of the school year).
Unadjusted, manfacturing added 89,000 jobs to 12.049 million; and construction added 166,000 to 6.003 million.
Unadjusted, private service-providing added 592,000 jobs to 96.069 million, of which retail trade added 112,700 to 15.144 million; professional and business services added 150,000 jobs to 18.641 million;financial activities gained 73,000 to 7.947 million; temporary help added only 25,000 to 2.6892 million; educational services dropped 260,400 to 3.1505 million; and leisure and hospitality added 446,000 to 14.816 million.
Hours and Earnings
Average weekly hours for all employees (Note: hours and earnings are only given seasonally adjusted) was unchanged for the third month running at 34.5 hours. Average hourly earnings increased ten cents to $24.01 and weekly earnings increased $3.45 cents to $828.35.
Average weekly hours for production and nonsupervisory employees (blue collar and clerical, seasonally adjusted) was unchanged at 33.7 hours. Average hourly earnings increased 5 cents to an average of $20.14, and average weekly earnings increased $1.69 to $678.72. However, this increase is after a $1.67 revision downward for May to $677.03. So June ends up being all of 2 cents higher than the original figure reported for May.
In retail trade, average weekly hours dropped two-tenths of an hour to 30.1 hours. Average hourly wages increased 6 cents to $13.96 and average weekly earnings fell 97 cents to $420.20.
In leisure and hospitality, average weekly hours increased one-tenth to 25.1 hours. Average hourly earnings were unchanged at $11.75. Average weekly earnings increased $1.18 to $294.93. Average weekly earnings have increased 1.3% in the first six months(or a 2.5% yearly rate).
Household data (Employment/unemployment)
Statistical significance: +/ – 400,000
The A tables: http://www.bls.gov/cps/cpsatabs.htm
A 1 for most information and categories
A 2 Unemployment by race
A 8 Part time workers
A 9 Full time workers
A 12 Duration of unemployment
A 15 U 6 un- and under employment
A 16 Persons not in labor force
Establishment date (jobs)
Statistical significance: +/ – 100,000
The B tables: http://www.bls.gov/ces/cesbtabs.htm
B 1 Total jobs and jobs by industry/type
B 2 Weekly hours, all employees
B 3 Hourly and weekly earnings, all employees
B 6 Weekly hours, blue collar
B 7 Hourly and weekly earnings, blue collar
18 comments
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Thanks for the analysis Hugh.
Its too bad that what are not outright lie now are horrible untruths like the current BLS numbers…..folks deluded into thinking things are getting better so they continue to support the status quo.
Hugh:
“full time workers into part time workers to avoid extending healthcare coverage to them under Obamacare. The answer is it is too early to tell. There is no trend. The June numbers on full and part time workers could be read to support about a 250,000 increase in part time workers due to Obamacare, but this could also be normal variation or due to other factors.”
Companies do not entirely escape the PPACA by converting enployees to part time. The gov/PPACA looks at total hours and divides by thirty hours. In effect, they get equivalents of full time workers for the part time workers.
Spencer must be on vacation as his Unemployment report is not on Angry Bear. I came looking for yours. As usual, a lot of good detail by you. Now if we could only get job creation up another 100,000 jobs a month and begin to enjoy higher Fed rates . . .
Everyone appears to be counting on babyboomers retiring. A lot of them took a hit in 2008 and will probably put off retiring for another 3-5 years so they can recoup some of what they lost.
“Everyone appears to be counting on babyboomers retiring.”
No one thinks this. This is a belief to justify youth unemployment, low taxes, and the current kleptocracy without pointing the fingers at the elite. The size of boomers is insignificant to the youth population and ignores the retirement savings crisis existed prior to the 2008 crash. Many of the boomers in positions to retire often have jobs where they can keep working for something to do and are delaying retirement because smoking hasn’t destroyed their bodies.
As for the boomer retirees becoming consumers, many of them have everything they are going to buy at that point in their life. Nursing care is still rare among seniors, and without smoking many future seniors in the position to afford care are healthy and will be healthy until they die. They won’t need adult babysitters.
Not so sure re that. We have much higher levels of Alzheimers (which suggests environmental factors are a contributor, but no one seems to want to pull on that string and see what it reveals) and diabetes, which over time is usually debilitating (loss of sensation in the feet leads to both balance problems since proprioception depends on feeling the ground through the feet and amputations due to failure to feel small cuts and disinfect them, leading to nasty and dangerous infections).
The key point Hugh underscores is that current employment levels are still 2.5 million below mid-2007… assuming it is possible to maintain the pace of 200,000 jobs a month, it will still take more than two years to match employment levels from 2007… but of course millions more will have entered the labor force over, what will be seven and a half years… this perspective shows how dreadful and dire the economy remains…
Aggressive measures are fully warranted…
Incidentally, shadowstats.com data show a much higher un/under employment rate that approaches 25%…considerably higher than Hugh estimates.. The shadowstats unemployment index has been rising ominously for several months.
Explanation from the site:
The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
Shadowstats is very good at documenting how government statistics have changed over time (both collection methods and computation) and discussing the general effects of those changes. However, its own approximations are not good at all.
That blurb about Obamacare maybe causing more part time workers made me wonder how many jobs might be created, good full time jobs, by going Single Payer. We have created a health care system in a straight jacket just to insure that a 20 – 30% profit is given to big pharma and insurance. This is a big restriction on job creation. The health care industry could certainly expand without creating too much dreaded inflation. We are the only country where big pharma runs the show and spends its illicit gains on tv ads! And nobody in their right mind can understand how private insurance has a place gambling in health care. It’s all a joke.
We keep hearing how the job creation engine in the US is small companies – I’m not sure that’s true, but think about how small companies would be able to grow if not burdened by rising health care insurance costs. And think about how consumer demand for goods would rise if they were not also burdened with rising health care insurance costs.
Health care insurance, like most of finanace, has perverted into an industry designed to extract the most cost with the least benefit. It’s become a dead weight on the American economy.
I’m not following the logic here. Most of the employers openly hostile about Obamacare operate in sectors with razor thin profit margins, which means if they have to spend more money on labor, they could become unprofitable.
We are also reaching the Limits to Growth. Why would you (us, really_ want to stimulate more unsustainable job creation? Unless, by job creation, you mean tear up the suburbs and turn them back into farmland for small scale farmers.
If you ever had any doubts that disemployment is the deliberate policy of the political class, this summary box from the Times today should dispel them:
Don’t worry about a thing. Everything’s going according to plan.
Too strong would mean a (scream) LABOR SHORTAGE!! which risks leading to better wages.
The asset-owning, rent-collecting, labor-employing minority don’t want anybody to be unemployed. They’d like to be the employers of everybody’s labor, they just want to do it while paying no money. But if surplus labor is what it takes to keep the workers from getting too sure of themselves, that’s a sacrifice they’re willing to make.
PS throughout history, “making a sacrifice” has involved someone in charge dressing up in nice clothes, taking hold of a weapon, and using it to cut the throat of a helpless victim.
The invester class rules the roost. IMO, a big reason why the yield curve flattened in 2011 was because their version of the “balance sheet” was not repaired sufficiently enough with the ARRA coming to a end(essentially), they had to continue to repair their balance sheets and the only way was to flatten the yield curve and drive long term rates down. Low long term rates helps savers and rentiers, especially in times of balance sheet damage.
This however, hurts financial companies from making profit from loans and originations. Thus, squeezing the economy. IMO, this is why the FED did “operation” twist and then lied about it.
The invester class is the main driver of this economy. Not capitalists or labor. If they want to spend, then long term rates will rise and this will be a cattle call to the “herd” and long term rates will continue to rise. The yield curve will steepen and financial companies will be able to make profitibility, thus further expanding the economy. Then when inflation starts rising and threatening the yield curve, the FFR is heightened.
Durables have finally got some traction again in Q2. Hence, the recession may be on the process of ending. We will see.
“The invester class is the main driver of this economy” is just a recasting of “job creators” > trickledown economics > Reaganomics > supply side economics. This style of economics has not worked anytime in the last 33 years although as indicated above it has been sold to the public under many different guises. It is, nonetheless, an excellent excuse to justify massive concentrations of wealth in the 1%.
There is no evidence that anyone in the financial sector will respond wisely, let alone non-criminally, whatever the incentives are. Until we in the 99% take back our government and redress the extreme wealth inequalities that exist, the looting of the 99% by the 1% will continue.
I would like to see a breakdown of employment increases in age groups by education level.
Gaylord, I am unaware of tables which break down employment by both education attainment and age at the same time. One problem is that when you go down into sub sub categories, there is a lot more volatility in the data.
You can use the A-4 to look at employment by education level.
http://www.bls.gov/webapps/legacy/cpsatab4.htm
And you can use annualized data like this for 2012 to look at employment by age group.
http://www.bls.gov/cps/cpsaat03.pdf
Another resource, one that I’ve used, looking at age groups, is FRED.
http://research.stlouisfed.org/fred2/categories
It’s the same data, but it is sometimes easier to manipulate there.
as i pointed out in my coverage, the household survey, from a survey of just 60,000 households, has a large margin of error; the 90% confidence interval for the monthly change in unemployment is roughly +/- 300,000, and for the monthly change in the unemployment rate it’s about +/- 0.2 percentage points…this means that when BLS reports that the unemployment rate for June was 7.6%, it means that there’s a one in ten chance that it’s actually either less than 7.4% or greater than 7.8%; obviously, that’s not something you want to base your monetary policy on…