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The Curious Case of the Part Time Worker: The BLS Jobs Report Covering September 2012

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By Hugh, who is a long-time commenter at Naked Capitalism. Originally published at Corrente.

Lambert here: Obama fans are — and I know this will come as a shock to you — yammering that this is The Greatest Jobs Report EVAH. How a blip driven by “a 582,000 increase in involuntary part time workers” that nobody can explain squares with the campaign rhetoric is left as an exercise for the reader. Hugh asks: “The big question in this month’s report is where did those 582,000 part time jobs come from?” Readers, theories on this curious case?

* * *

In September’s report, we are presented with two contradictory numbers. An uninspiring 114,000 jobs were created versus a stellar three-tenths of a percent decline in unemployment to 7.8%. Basically, what we had was an anomalous spike in employment in September of 873,000. This was made up of 456,000 unemployed. A tenth percent change in unemployment represents about 150,000 people. Three-tenths would come to about 450,000. So that checks. The September employment spike also includes some 418,000 people entering the labor force. The main driver of the spike appears to be a 582,000 increase in involuntary part time workers.

Turning to the report, revisions in the number of jobs for the last two months were larger than normal. Jobs in July increased 40,000 (28%) from 141,000 to 181,000. This was unusual in that they were originally revised down 22,000 last month from 163,000. August’s disappointing number of 96,000 (48% increase) was adjusted up to a more respectably mediocre 142,000. In all, revisions added 86,000 jobs. This is on top of the 114,000 reported for September.

In September the potential labor force of the non-institutional population over 16 increased 206,000 from 243.566 million to 243.772 million. The employment-population ratio increased an impressive 0.4% to 58.7. So multiplying these two gives us 121,000 or the number of jobs needed in September to keep up with population growth.

From the Household survey, seasonally adjusted, the labor force increased 418,000 from 154.645 million to 155.063 million. Seasonally unadjusted, it decreased 180,000 from 155.255 to 155.075 million. This decrease reflects the tailing off of the end-of-summer, going-back-to-school trend begun in August. The seasonal adjustment is a smoothing of this trough. Note the similarity in the sizes of the labor force between the two. This marks their Fall convergence.

Since the labor force is essentially the same, we would expect that the adjusted and unadjusted participation rates (the ratio of the labor force to the non-institutional population) also to be the same, and they are (63.6).

Seasonally adjusted, employment rose 873,000 from 142.101 million to 142.974 million in September. Unadjusted, it increased 775,000 from 142.558 million to 143.333 million. Both these numbers are anomalous. They aren’t just at odds with the (114,000) jobs number, but we have simply not seen an increase of this size August to September in the last 10 years. Pre-recession, there were often declines. Last year there was an increase of 353,000 adjusted and 167,000 unadjusted.

The labor force is comprised of the employed plus those defined by the BLS as unemployed, i.e. without a job and looked for one in the 4 weeks preceding the survey. So while the labor force, adjusted and unadjusted, was nearly the same. We see some difference in the distribution between employed and unemployed. The unadjusted numbers actually show more employed and consequently will show fewer unemployed. That is the current employment-unemployment picture is somewhat better than the seasonally (official) adjusted numbers suggest.

Seasonally unadjusted, unemployment declined 954,000 from 12.696 million to 11.742 million. Seasonally adjusted, it declined 456,000 from 12.544 million to 12.088 million.

The unemployment rate fell a large 0.3% adjusted to 7.8%, and and an even larger 0.6% unadjusted to 7.6%.

The adjusted U-6 measure of un- and under employment remained unchanged at 14.7% while seasonally unadjusted it decreased by 0.4% to 14.2%.

The adjusted U-6 was made up of 12.088 million unemployed, 8.613 million involuntary part time workers (up 582,000), and 2.517 million of the marginally attached (down 44,000). This totals 23.218 million, up 82,000 from last month.

The BLS’ measure of its undercount, those who do not have a job, want one, but have not looked for one in the last month, declined 604,000 from 7.031 million to 6.427 million.

Because this measure does not reflect well changes in the economy, I have developed an alternative to it. In my alternate calculation, I compare the current labor force to where we would expect it to be in a solid economic expansion: labor participation rate of 67%. The difference between these two is my measure of the undercount.

.67(243.772 million) = 163.327 million (where the labor force should be)
163.327 million — 155.063 million = 8.264 million (the real undercount)

This is a decline of 280,000 from the August figure of 8.544 million. This is the capture of the undercount that the BLS misses.

With this number we can now go back and calculate where the U-3 and U-6 really are, that is the real unemployment and real disemployment rates.

Real unemployment: 12.088 million (U-3 unemployment) + 8.264 million (undercount) = 20.352 million (down 736,000 from August)

Real unemployment rate: 20.352 million / 163.327 million = 12.5% (down from 12.9% in August)

Real disemployment: Real unemployment + involuntary part time workers = 20.352 million + 8.613 million = 28.965 million (down 154,000 from 29.119 million in August)

Real disemployment rate: 28.965 / 163.327 million = 17.7% (down from 17.8% in August)

By duration, the number of long term unemployed (6 months or more) decreased by 189,000 to 4.844 million (41% of all unemployed, up from 40% last month). Again this figure is vastly understated because it does not take into account millions long term out of a job in the undercount.

By race, employment among whites increased 652,000 to 114.992 million and among African Americans 84,000 to 15.881 million. The unemployment rate among whites was 7% and among African Americans 13.4%.

Turning now to the Establishment survey of jobs, seasonally adjusted total nonfarm jobs increased 114,000 to 133.500 million. The largest gainer was in healthcare at 44,000. Unadjusted, they increased 574,000 to 133.797 million.

Private employment increased seasonally adjusted, 104,000 to 111.499 million and unadjusted decreased 377,000.

Seasonally adjusted, government gained 10,000 jobs to 22.001 million; unadjusted, it gained 951,000 to 21.808 million.

Basically, the large changes in the unadjusted private and government jobs numbers reflect shifts from teachers, staff, and students going back to school. Unadjusted, education at the state level increased 311,500 and at the local level 850,000.

The average work week for all employees increase 0.1 hour to 34.4 hours. Average hourly earnings for all workers increased 7 cents to $23.58. Average weekly earnings for all workers appear to be incorrectly stated. They should show an increase of $2.41 to $811.15.

The average work week for blue collar employees was unchanged at 33.7 hours. Their average weekly earnings increased 5 cents to $19.81 and weekly $1.69 to $667.60.

The big question in this month’s report is where did those 582,000 part time jobs come from? They seem to have had no impact on weekly hours. Of course, part time is defined as 1 to 34 hours per week, and if you notice, the average for all workers is only slightly better than that. More surprising is that these did not drag on earnings. Earnings increased, even beat inflation, and all this despite what is generally considered to be a slowing economy. Perhaps there will be more clarity next month.

Household data (Employment/unemployment)
Statistical significance: +/ – 400,000
The A tables:
A 1 for most information and categories
A 2 Unemployment by race
A 8 Part 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:
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

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29 comments

  1. TreetopsTrading

    It’s surprising that the market and economists still stress over the government’s unemployment numbers. Because of the way things are measured and the fact that this entire post was required to explain it shows how irrelevant it is.

    1. Westcoastliberal

      Absolutely agree, Treetops. Our government doesn’t want to report the truth on anything. Just look at what they’re trying to do to Social Security? The so-called “chained” inflation indicator…oh let’s not include food, fuel, pharmacueticals in the cost of living figures…
      Personally I am not at all surprised at the BLS numbers. At this point in our history such schenanigans are baked in the cake.
      Sad thing is, crap like this is a temporal marker that our social structure is disintegrating along with our atmosphere. Spend some time outdoors and you’ll see what I mean.
      Good luck everybody!

  2. kevinearick

    the participation rate is in 1982 territory. what does that say, relative to population expansion since?

  3. Hugh

    The participation rate is the ratio of the actual labor force, that is the currently employed and unemployed as defined by the BLS, to the non-institutional population over 16, the potential labor force. Population growth shows up in the non-institutional population. It is never seasonally adjusted.

    The last time the participation rate was 63.6 (seasonally adjusted) was in December 1981.

    108.912 million (labor force) / 171.166 million (non-isntitutional population) = .636

    In September, the numbers looked like this:

    155.063 million / 243.772 million = .636

    As I pointed out, from October 1996 to June 2001, in 44 of those 45 months, the participation rate was at or above .67. I don’t know what the upper bound is on the participation rate. A lot depends on how we defend employment. Stay-at-home moms and dads do socially useful work. And then there are other groups like students and the retired. The point I am getting around to here is that the propaganda epitomized by Romney’s 47% rant is class warfare. Almost everyone contributes to our society in some way. Millions who don’t have jobs people would work if work was available. There is no vast amorphous group of societal freeloaders. Indeed about the only freeloaders I can think of are in the 1%.

    1. Paul Tioxon

      Hugh,
      In Re students, my son goes to community college for IT and will head to a 4 year state U to finish off a BA. Pell grants have gone from $12.6B in 2005-2006 to $35.6B 2010-2011 and the number of students has doubled from 6 to 12 million. My experience of the 5 county campuses in the Philly region, including the City Community College, is that they are being heavily supported for absorbing not only young kids, but returning middle aged 40-50 year olds. They can then be fed to 4 year schools, with 2 years done and thereby reduce total indebtedness by half. There are no dorms or meal plans and a Pell grant can usually pay for all of the cost of community college, including books, fees, and some can’t do without gadgets like laptops and smart phones.

      http://www2.ed.gov/finaid/prof/resources/data/pell-2010-11/pell-eoy-2010-11.html

      I went to Table 1, Part 5. Over 21 million applied for the grants with 12.6M getting them. The parking lots at my sons’s school looks like the King of Prussia shopping center during Christmas season. And new buildings seem to be going up for the past several years, including stimulus money for EV, electric vehicle, charging stations EV exclusive parking!! They are mostly empty, no one there has Tesla Karma or Chevy Volt, yet.

      Does this explain where millions of 20 somethings are getting safe harbor while the economy limps along? It looks that way to me.

      1. Hugh

        Intuitively, I would say yes. In 2009, there were 12.072 million 24 and younger enrolled in college. Some percentage of these were employed. The 18 to 24 cohort has a high level of part time employed 47% (in 2010) as compared to mid-teen percents for cohorts 25 to 59 (See my comment below for source).

        For the college enrollment number, I used:

        http://www.census.gov/compendia/statab/2012/tables/12s0281.xls

        There may be something more current.

        Prison, especially for African Americans, is another place to park people. Inmates don’t even make it into the non-institutional population over 16, the base number for labor characteristics.

  4. run75441

    lambert:

    What was Participation Rate last month and what is it now? This is the answer. I have not had time to look at it.

  5. Hugh

    The participation rate last month was 63.5% adjusted and 63.7% unadjusted. Both were 63.6% in September. Each tenth of a percent change is equal to about 244,000 people.

  6. Hugh

    I sometimes think somebody in the Romney camp reads my job analyses because I am one of the few who explain what the broader measure of the U-6 is and I concentrate on the issue of those exited from the labor force by the BLS’ definitions. Romney has talked about the three components of the U-6, especially about those leaving the labor force. The thing is he repeated this criticism of the current report, but the opposite is the case this month. 418,000 of those defined out of the labor force re-entered it or entered it for the first time. But politics then is never above using a good line whether it is true or not.

    1. The Rage

      U-6 is hardly new. During the great depression its “estimated” number was 37%.

      That said, it still is not full unemployed as most work fulltime even though they are considered “part time”. Buyer beware there.

      The U-6 is usually follows the U-3 with a lag. See the early 90′s recession for similiar outlook.

      1. Hugh

        My point was that I am one of the few people writing on this who look at the components of the U-6. So when Romney starts making comments reflecting the components of the U-6 I begin to wonder where he got that from. It’s not like he’s all that clued in otherwise. As I said, his talking point about people leaving the labor force and thereby making the unemployment rate look better is one I have been hammering on, but it is not applicable to this month’s report where you had substantial numbers coming into the labor force. Yet Romney repeated the earlier and more general criticism of people leaving the labor force. True as a trend but not in this particular instance.

  7. The Rage

    LPR rates have no where to go down. Sorry folks, the Boomers are retiring out of the economy. When the peak of them retire in the next 10 years from that critical mid-50′s/early 60′s period it will fall even more. The fact is trend growth is falling from a aging economy.

    Time for people to move on from that one. Instead, raw employment growth is progressing, but slower than wanted. Polling supports this idea over econ-weenie intellectuals.

  8. Ed

    I’ve been looking at the participation rate and pretty much ignoring the other data for years. I see there is a new talking point that the participation rate is going down because the baby boomers are retiring. Of course there is alot of evidence that the baby boomers are delaying retirement.

    Social changes can affect the participation rate. It was at the current level in the 1950s, when women were expected to be supported by their husbands. I think it made alot of difference that salaries were high enough so that one salary could support an entire household. You are not going to get every non-senile adult into the labor force without alot of make work jobs. The issue is the terms on which society decides who is not going to work and how they are going to be supported.

    I think the current jobs report is very suspicious, simply by the fact that is a pre-election job report, and there are more than the usual number of revisions.

    1. Tony Colarossi

      Do you have similar computations for septembers going back the past ten years or so? It just seems this has limited utility out of context with other periods.

  9. psychohistorian

    Thanks for another stellar monthly BLS data shtredding/explaining. The BS about the LPR is one of the biggest lies in the mix of data BLS now churns out.

    How about we get rid of the welfare 1% at the TOP and BOTTOM of our current social arrangement? They are the entitled haters and non sharers of our world.

  10. Hugh

    This is a breakdown of current workers by age for 2010:

    Both sexes 137,753
    16 to 17 years 1,329
    18 to 24 years 15,305
    25 to 29 years 15,377
    30 to 34 years 14,413
    35 to 39 years 15,028
    40 to 44 years 15,522
    45 to 49 years 16,994
    50 to 54 years 16,115
    55 to 59 years 12,916
    60 to 64 years 8,536
    65 years and over 6,219

    http://www.census.gov/population/age/data/files/2010/2010gender_table18.xls

    I guess the official definition of baby boomer is anyone born between 1946 and 1964. I tend to think of the cutoff date as more like 1960, but that’s just me. Depending on which definition you want to use, we are talking about the last 4 or 5 cohorts. While the 4th and 5th cohorts are larger, it is not like they are all that much larger.

    For me, the boomer question seems like a red herring. It ignores de-industrialization, offshoring of jobs to China and abroad, and population growth through immigration. It ignores that we still have a crushing jobs crisis affecting millions of all ages. Once the jobs are there and people don’t want them, then you can start talking to me about the participation rate.

  11. Mary Wilbur

    Why does the Establishment report show hours worked and hourly and weekly earning only for blue collar workers? Why are white collar workers not included? How is blue collar worker defined? Does it include, for example restaurant workers, whom I would define as “service workers”?

    1. Hugh

      I tried to leave you a reply but WordPress ate it. Here’s a second try with me trying to dodge WordPress.

      Blue collar is my term. I thought it was easier to understand than the BLS’ “production and nonsupervisory employees” terminology.

      There is no corresponding category for white collar jobs. There is the B-Eight table which gives a limited breakdown of earnings by general category of work. So it doesn’t have restaurant workers’ earnings, or them for the closest subcategory which is Food Services and Drinking Places, but it does have earnings information for the more general category of Leisure and Hospitality.

      http://www.bls.gov/webapps/legacy/cesbtab8.htm

      I also wrote a post recently called Income Inequality and the Death of Trickledown which you can google. It has a nice graph of income distribution in the US over the last 45 years.

  12. J. Diamonti

    Hugh, You do know that this analysis and your eviseration of lame talking points is just begging for a drone in your yard, don’t you? (After the election of course!)

    Ever seen: “Sleep Dealer”? 9/10 of a very good film! (Jill)

  13. Ed

    Paul Craig Roberts has a good analysis of the most recent jobs report:

    http://www.counterpunch.org/2012/10/05/the-bad-news-in-the-new-jobs-report/

    Admittedly, this is mostly the same thing he writes about every jobs report. But the BLS keeps running substantially the same report every quarter, so we keep getting the same commentary.

    There is some stuff that is new in the column. First PCR highlights the 2.5 million people who “wanted and were available for work” but told the survey they hadn’t searched in the last four weeks. PCR calls these people “unemployed” because, well, they are but the BLS differs. Anyway this is not new at all but I was somewhat surprised the number is so big.

    Second, PCR is skeptical that the number of restaurant jobs claimed in the report actually exist. Come to think of it, that is suspicious as where I live restaurants and bars seem to have been closing slightly more than new ones have been opening, and this is exactly the sort of figure the BLS economists would try to estimate given the obvious problems with getting exactly reported data. This category has made up a big chunk of “new” jobs in the US for over a decade.

    1. The Rage

      Jobs like these are the new “migrant” workers of the modern world. They may not exist all the time, but other times they will exist when they are not counted. This is why you see the up and down moves with them.

      1. Ms G

        Thank you for commenting. Your comments are very important to us. Please feel free to comment again. But only after taking a refresher First Grade English and Grammar class.

    2. Hugh

      The 2.5 million to which you refer are I think the marginally attached which are defined as:

      “Persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months (or since the end of their last job if they held one within the past 12 months), but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey”

      They are a subset of the 6.427 million in the category Not in Labor Force Want a Job Now. This is what I call the BLS undercount. As I outline above, I have proposed an alternate, more responsive to conditions in the economy which I call the real undercount and which I calculate at 8.264 million.

      If unemployment was only as bad as our elites claim, it would be a problem but not the crisis it actually is.

Comments are closed.