As Oregoncharles put it, in terms of labor force participation, “Obama has now cancelled out the entire effect of the Women’s Movement.”
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.
The jobs report today has been described as “ugly,” though it certainly didn’t, or shouldn’t have, come out of the blue: Layoffs in the energy, Big Tech, retail, and other sectors have recently mucked up our rosy scenario.
“The third quarter ended with a surge in job cuts,” is how Challenger Gray, which tracks these things, started out its report yesterday. In September, large US-based companies had announced 58,877 layoffs. In the third quarter, they announced 205,759 layoffs, the worst quarter since the 240,233 in the third quarter of 2009!
Year-to-date, we’re at nearly half a million job cut announcements (493,431 to be precise), up 36% from the same period last year. And they’re “on track to end the year as the highest annual total since 2009, when nearly 1.3 million layoffs were announced at the tail-end of the recession.”
These dogged references to crisis-year 2009!
It’s been going on all year. In the first half, it was the energy sector. But more recently, Big Tech and others jumped into the fray.
Biggest sinners this year: HP 30,000 (laying off people through thick and thin is what it does best); Target 17,000; Schlumberger 9,000 in January and another 11,000 in April; supermarket chain A&P 8,500; Microsoft 7,800; Baker Hughes 7,000; and down the line, including CAT a week ago with 5,000.
The energy sector is still number one this year with 72,708 job cut announcements. Retail isn’t far behind with 68,871, the computer industry with 58,874, and industrial goods with 44,057. These are just the largest employers with big announcements that make it into the report.
When a smaller company lays off 20 people, it doesn’t show up anywhere, unless it’s a startup in the “unicorn” club with a “valuation” over $1 billion. Then the media drool all over it.
Evernote, which raised a total of $302 million by May 2012, with the last round giving it that glorious $1 billion “valuation,” announced its first layoff in January, and its second a couple of days ago. Because it’s a formerly hot startup, it made the news. But a small manufacturer quietly laying off 100 people might barely make the local press.
So now we get today’s “ugly” jobs report. It wasn’t the end of the world, compared to the end-of-the-world jobs reports in 2009. But there was a trend that, if it continues, is truly ugly. More on that in a moment.
The economy added only 142,000 jobs in September, according to the Bureau of Labor Statistics. June and July were revised down by 59,000. Hourly wages edged down 1 cent, so not the end of the world either, just the continuation of a sad theme. Average weekly hours also edged down. Manufacturing shed jobs for the second month in a row, as we knew it would [read… US Manufacturing Recession Draws Eerie References to 2009]. But the headline unemployment rate remained comfortably at 5.1%, in part because the participation rate dropped to just 62.4%, the worst since 1977.
Over the past couple of years, there has been a trend in the employment numbers that was at first hard to see due to the volatility of the monthly data. But now the trend has come into full bloom: the deteriorating growth of the number of employed people in the US has turned into shrinkage.
Back in 2013 and parts of 2014, the monthly increases were substantial, if volatile, but then started waning. By July 2015, there were 148.84 million employed in the US. In August, there were 149.04 million, up 196,000. But in September, the number of the employed plunged to 148.8 million. According to this report, there are now 236,000 fewer employed than a month ago.
It doesn’t exactly corroborate the headline notion that 142,000 jobs have been created, even as the number of employed shrinks.
Was it just a statistical quirk, something that will reverse with flying colors next month? We hope so. But beyond this hope, there is the two-year trend, and despite all the ups and downs and the month-to-month volatility, the trend is starting to crystallize.
This chart overlays the monthly change in the number of the employed (red bars, in thousands, right scale) and the unemployment rate (black line, left scale). One thing is clear: even as the unemployment rate fell from 5.3% to 5.1% over the last four months, the total number of employed only increased by 5,000. And even as the unemployment rate remained flat from August to September, the number of employed plunged by 236,000:
If this worsening trend continues, it would be truly chilling because the Fed still has the interest rate at near zero, along with nearly every country in the developed world, and QE is still the standard in Europe, Japan, and elsewhere. Central banks have kept their monetary foot on the gas pedal and floored it for seven years straight. Governments around the world, including in the US, despite all the hoopla about “austerity,” have piled on historic amounts of debt at dizzying rates in the greatest global stimulus package of all times.
And yet, the US economy might be dropping below stall speed, with employment showing signs of deterioration, while asset prices, after seven years of “wealth effect,” are teetering precariously at ludicrous heights. The risks that the Fed promised it would banish from the globe are suddenly returning with a vengeance.
So when will the data stop raining on the parade? Read… Oops, Atlanta Fed’s GDP Forecast Suddenly Plunges
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“austerity” is not want most people think… especially from an anthropological purview…
Skippy… it denotes the core eating [in some cases literally] the periphery…. bon appetit’
This raises Lambert’s question again. What are all these people who are officially out of the labor force doing?
Poet and photojournalist Linh Dinh has been documenting it painstakingly, although it takes a lot of fortitude (or antidepressants) to bear witness to it on a regular basis:
http://linhdinhphotos.blogspot.com/
About Linh Dinh (copied from his site):
Linh Dinh
Born in Vietnam in 1963, I came to the US in 1975, and have also lived in Italy and England. I’m the author of two books of stories, Fake House (2000) and Blood and Soap (2004), five of poems, All Around What Empties Out (2003), American Tatts (2005), Borderless Bodies (2006), Jam Alerts (2007) and Some Kind of Cheese Orgy (2009), and a novel, Love Like Hate (2010). I’ve been anthologized in Best American Poetry 2000, 2004, 2007, Great American Prose Poems from Poe to the Present, Postmodern American Poetry: a Norton Anthology (vol. 2) and Hopeless: Barack Obama and the Politics of Illusion, among other places. I’m also editor of Night, Again: Contemporary Fiction from Vietnam (1996) and The Deluge: New Vietnamese Poetry (2013), and translator of Night, Fish and Charlie Parker, the poetry of Phan Nhien Hao (2006). Blood and Soap was chosen by Village Voice as one of the best books of 2004. My writing has been translated into Italian, Spanish, French, Dutch, German, Portuguese, Japanese, Korean, Arabic, Icelandic and Finnish, and I’ve been invited to read in London, Cambridge, Brighton, Paris, Berlin, Reykjavik, Toronto and all over the US. I’ve also published widely in Vietnamese.
P.S. Click on “older posts” at the end of the scroll to see the archive; he appears to be on a rare trip abroad presently, although some of the posts on the page are from the Pope’s visit to Philly.
Great blog. Thanks for this.
A great blog. Wonderful photos. According to Wikipedia, he as a guest writer in Italy recently and lives in Philly. Seems to be meeting his cronies in Leipzig right now. Thanks for the link.
And the Atlanta Fed has the answer:
https://www.frbatlanta.org/chcs/LaborForceParticipation.aspx
Of all people who are out of the work force, about 90% say they don’t want a job. Why? First of all, the burgeoning cohort of retirees, driven by increasing longevity and the Boomer generation hitting retirement age. Among the prime working age group 25-54, of those who don’t want a job now, about half are staying home to raise the kids. Another 30%, primarily over age 50, are ill or on disability.
Since the percentage of disability claims have risen, it is fair to ask how many claims are driven by otherwise poor job prospects. Among those staying home to raise the kids, poor wages for second-earner jobs vs. soaring child care costs are probably the big driving factor.
Scroll down to the interactive graphs to see for yourself. By the way, the data is drawn directly from the exact same monthly surveys that give us the labor force participation rate itself.
The disability part is underreported.
It is our welfare state, and it is a dismal fucking state. I have friend who does a lot of treatment of people on disability for psychological problems, and his reports are grim.
The amount per month is fucking paltry, even with food stamps, but it’s enough to not die on. The only thing you must not ever do, once you get on, is get off. Working is forbidden. If you get a job, they can force you to pay them back. These people are removed from the workforce.
If I was a right wing person I could say , “this is unsustainable” and rant about cheating, whatever. But I’m not, and I won’t. Because it’s absolutely sustainable, we can be a country where some huge portion of people are forbidden from the idea of productive work, almost bribed (with a pathetic amount of money) to just stay out of life.
There should be a right to work (but in non union busting doublespeak), a right to the dignity of a decent job, a right to contribute to something larger.
The “right to profit” will always trump any kind of work rights. Short of a major revolution that entirely changes our current political class and how they are elected, the right to profit drives our system. Our politicians need to money donated by company profits in order to get elected and once elected they serve the needs of the profitable.
Here is one detailed explanation. A World Without Work
“World of No Work” – The Atlantic [no shit]
Neolib cover story crap. So where are all these robot factories the author speaks of??
The stupid article starts off with talking about the disappeared Great Lakes steel industry of the late 70s. Anyone whom was sentient at that time was treated to numerous articles in Time Mag and Biz Week Mag about how the Japs stole it. Today, the Chinese stole it from the Japs.
I met one in a produce market today–they are living hand to mouth–buying a few pears, when other shoppers are filling baskets with fruit and veggies.
Maybe this is the second austerity step. Since we didn’t go for it the first time. So they blow things up again, next year sometime, and then, the rulers of the world have the tea party folks behind them screaming no more bailouts. So they let it slide further down. Then finally they play some financial games that make it look like no bailout, but it really is. But this time the hole is far deeper, think Greece, and we have no choice but to either storm the bastilles (doubtful, because the tea party will say that finally the govt will stop spending) or roll over and lose all our Medicare and SS. I can’t wait!
As those of us who’ve read Yves’s book know, the banksters will blow up the financial system again — none of the reforms have really reined them in, and they know for a certainty that the U.S. taxpayer will bail them out the next time, too — that’s what TBTF means.
A lot of the bailouts will be back-door, again, so even combined Tea Party and Occupy anger may not stop them.
“When a smaller company lays off 20 people, it doesn’t show up anywhere, unless it’s a startup in the “unicorn” club with a “valuation” over $1 billion. Then the media drool all over it.”
John Crudele has made this point over and over again. There is no reliable mechanism for tracking small business hires and layoffs. The Department of Labor does produce an estimate of small business hiring. This estimate is fabricated to keep U6 (the TV “unemployment rate” low). Its one reason why people have started talking about the labor participation rate instead of U6.
To switch to some of the points people have been making about the Fed, no you can’t do the lower interests trick if you have been keeping interest rates at zero. But they can come up with ways to remove money from peoples’ savings accounts. This was done at least once in Argentina. And it does mean that all money winds up in circulation, people just stop saving.
I share your skepticism. I see the stats that small business are the largest contributors to new jobs. But I never see any follow through about of many jobs they loses when these business inevitably fail or even the quality of these jobs. I suspect those stats don’t figure as predominantly in the math, letting them good the job creation figures.
Minor quibble — the “unemployment rate” all the talking heads refer to is the U-3 rate. The U-6 rate includes people who are working part time but want full-time jobs. It’s a lot higher than the U-3 rate.
*** What are all these people who are officially out of the labor force doing?***
being Mr. Mom, for an empty nest household serving as the in-house chauffeur (after cutting back to one car), Mr. Fix-It, maintenance guy
going on Social Security/private disability (AFTER working through chronic pain as long as jobs were available)
selling your home equity in an expensive region and moving somewhere much cheaper and then slicing expenses
shacking up with parents/grandparents and providing home care.
working under the table from odd job to odd job
the era of single-generation families (1950 to 2000) is over. Going back to the default way of life for the history of 99% of human civilization and a big chunk of the current world, multi-generational families.
Yes. I live in an upper middle class suburb of Philadelphia and almost all my neighbor’s have a twenty something who cannot find full time career work. Most are living at home with parents paying for their beater cars and a potential interview wardrobe for interviews that never seem to happen. About half have low wage jobs like store clerk and stocking or waitstaff jobs. The rest just keep applying and stopping by us and everyone else to see if we know of any openings for anything. Not texting but knocking on our door every few weeks. When we neighborhood parents all get together the fear and frustration is palpable – what can we do for our kids? The ‘old pound the pavement’ advice and ‘get a good education talk’ has proved fruitless for them. We feel we have let our families down but do not know exactly how to fix what we did..
If you patronize our local PF Chang’s ( I will even tell you the location – Wegman’s shopping center in Collegeville, PA 19426) you find ost of the waitstaff are degreed and desperate. They are almost all living at home and cannot find even entry level jobs in their fields. They ask the patrons and hand out home printed cards with their info and college major areas of study pleading with us to call if they hear of anything. I sometimes leave the place in tears….
We have destroyed half a generation’s future and the old fixes we were taught to use by our parents to guide our kids are not working.
My own college student son has not been able to find a summer/ semester break job for the last few summers. Nothing. Not even lawn mowing – as everyone who doesn’t do their own seemingly can afford a fancy service – mostly staffed by people here on work visas. They won’t hire my son as they “want someone all year” and don’t want to keep switching. Of course we keep hm busy with our own property and “chores” but a young man or woman needs a job and a paycheck. He also volunteers at our local food bank( apparently even in the affluent ‘burbs there are a LOT of people who are not making it …).
We know several young people who are on welfare as both people have lost their jobs in a short span. We know several more whose hours were cut and they had to quit entirely because they could then not afford childcare. No self righteous comments about they shouldn’t have had a child please. They were gainfully employed until the unthinkable occurred and most were in in thirties before they felt secure enough to have a child in the first place ….
We have blown up the world. Or we have allowed it to be blown up by our ignorance and distraction.
A footnote on “waitstaff” jobs: my daughter-in-law made far more waiting tables at a fancy restaurant than she did as a teacher – after spending a fortune getting teaching degree. Granted, it depends on the restaurant – and the school district. But good teaching jobs are extremely hard to get in Oregon.
Finally quit teaching, a nightmare job for starvation wages, and will likely go back to waiting tables.
The NY Times has a story about how companies such as ToysRus are hiring Indians on temporary visas to learn the jobs of American workers, which are then shipped to India.
The story gives an example in accounting — hardly a low level job, IMO. The Indian trainer shadowed to accountant for weeks; the accountant was instructed to cooperate under threat of losing their severance package upon being let go– which everyone acknowleded, was going to (and did) happen.
Sounds like one of those H1B visas which are issued only when the employer can “prove” there are no qualified Americans available to do the job. /sarcasm.
It sounds like “upper middle class” isn’t what it used to be. I wonder . . . what is the average size of the lots these houses are on? How much of each yard is free from shading by huge grand old trees? If the currently-disemployed live-at-home young people could be persuaded to understand that working to grow food is just as honorable as working to earn money to buy food with, how many of those young people might learn and practice some kind of high input/ high output/ high intensity horticulture on their parents’ yards while looking for money-work?
If these houses are all “paid for” and provably owned and immune to FIRE sector operator theft, then perhaps these houses and yards will themselves be the bequeathable and inheritable survival wealth guaranteeing the non-death by non-starvation of these families’ young people? Or at least making such survival more likely?
I wonder what kinds of degrees do these young unemployed people have? Do the ones with real degrees in fields like engineering and computer science have the same problems finding a job?
>> Do the ones with real degrees in fields like engineering and computer science have the same problems finding a job?
Yes.
I suspect the Seattle area, as far as computer science, may be the exception; people I’ve known in the past that are web developers were able to find work a few weeks after getting laid off. Maybe things have gotten worst in the past few years, but with the presence of Amazon, that may not be the case.
iirc the BLS had a report a few months ago that only 25% of those with a BS degree in a Science/Technology/Engineering/Math BS degree have a STEM-related job currently. Note this would be the entire working age population, not only just college grads. The subsection of only Engineering, Comp Sci, or Math/Stat BS degree holders was at 50%.
So much for the Unlimited H1-B Lobby Propaganda of “Murica don’t have nuff Engineers!”
the BLS study didn’t state the status of those in non-STEM jobs. I would suspect that a minority had FT jobs that paid equivalent or better than the STEM jobs they trained for, such as BS Elec Engineer that subsequently obtained a radiologist medical degree & is currently a working radiologist. I would suspect the majority are suffering Type 1 Underemployment, working at a restaurant, retailer, or some such.
Not to be snide but, who is “we”?
Keep doing what’s not working.
You never know what is enough unless you know what is more than enough. — William Blake
We as a society know longer know what ‘more than enough’ means. That’s the root of our problem.
Great quote. More than enough well being or more than enough hardship.
I guess the Team Blue strategy of shouting about the great economy never had a chance.
As opposed to the Team Red strategy of shouting that the unemployed are at fault for being too lazy to work?
Or both sets of tactics together, the happy talk and sloganizing, the guilt and malfeasance, as the advertising campaign for the class war.
Yet, the GOP won. Of course, the 2006 GOP significantly outperformed their 2010 and 2014 counterparts because of their decline, but one would think Team Blue would take advantage of that. Of course, embracing supply side economics and heritage foundation Healthcare reforms won’t produce prosperity even if Barack Obama does it.
QE? Nonplus.
Krugman seems to think we have had a great recovery. Nothing against him; I think he’s good on finance, but totally, hopelessly out of touch on anything touching labor issues.
His policy on finance is deficit spending, QE, and low interest rates to fuel a financial bubble that feeds income inequality, guts community level financing, and favors large corporations over small businesses who can’t borrow at the low rates. His policy finance and the labor consequences are one in the same, how could he be good on one but not the other.
Another step in the march towards universal guaranteed income, the three-day workweek, total automation and the transition to a post-scarcity play ethic of plenty and leisure as opposed to the old work ethic of hoarding and slaving and worrying.
*laughs up sleeve
This data doesn’t seem to match anything in FRED. Nearest equivalent shows payroll growth. But leaving that aside, is it possible that at least some of this decline in total employment reflects an aging population that is retiring? Isn’t what we really care about the number of employed as a fraction of the working age population?
Sorry, but full time jobs absolutely rocketed. Your monthly change misses that, because it doesn’t go by job type. In otherwards, recessions end. Not your best article.
The surge in median income backed this up.
What is your take on what actually is a GOOD measure of the USian employment market, given that the “headline”/U3 number is bogus for reasons mentioned in the article & comments?
How about the 25 to 54 yr old employment-to-population ratio, either the overall number, or men-specific 25 to 54 yr old employment-to-population ratio? Perhaps the men-specific figure is better for historical comparisons, since women were partially discriminated out of the job market in the earlier years of the data series’ era back to the 1950s, whereas afaict men in this age range were expected to work full-time or be considered losers by society & deserving of no social safety net (even less than the overall trivial/week/minimal social safety net), for this entire data era, 1950s through current.