By Hugh, who is a long-time commenter at Naked Capitalism. Originally published at Corrente.
I suspect that the Bureau of Labor Statistics report covering November 2012 will be heralded as a solid report, but as usual there are a lot of negatives behind the headline numbers. Seasonally adjusted, 146,000 jobs were added to the economy and the unemployment rate dropped two-tenths of a percent to 7.7%. For those of you who are conspiratorially minded, after upward revisions in the months preceding the election, last month’s jobs number was cut by 33,000 and September’s 16,000.
October 171,000 > 138,000
September 114,000 > 148,000 > 132,000
The potential labor force as represented by the noninstitutional civilian population over 16 increased 191,000 in November from 243.983 million to 244.174 million. Multiplying this by the employment-population ratio (58.7%) gives us an estimate of the number of jobs needed to keep up with population growth: 112,000. The difference between this and the number of jobs created in November is 34,000. While beating population growth, this is still a dismal number. At that rate, it would take 2 1/2 years to create a million jobs above population growth for the unemployed, and there are 12.029 million (SA, seasonally adjusted) unemployed, –even under the BLS’ highly restrictive definition of what constitutes being unemployed. It makes me wonder if our political classes are pinning their hopes on baby boomers exiting the labor force and eventually solving the chronic crisis in unemployment for them.
Turning to the Household (people) data, the labor force declined, seasonally adjusted, 350,000 from 155.641 million to 155.291 million. Unadjusted, it declined 826,000. Basically, there was a big increase in October with the November numbers reflecting a drop back to the September levels for the unadjusted number and half way back for the adjusted one. It is unclear where the October spike came from.
These drops were reflected in the participation rate which fell three-tenths of a percent unadjusted to 63.5% and two-tenths of a percent adjusted to 63.6%.
Seasonally adjusted, employment fell 122,000 from 143.384 million to 143.262 million. Unadjusted, it fell 490,000 from 144.039 million to 143.549 million.
While employment fell, unemployment did not rise. Seasonally adjusted, unemployment fell 229,000 from 12.258 million to 12.029 million. Unadjusted, it fell 337,000 from 11.741 million to 11.404 million. Because employment fell in November, this means that the decrease in the number of unemployed did not come about through their finding jobs but from them being defined out of the labor force. This in turn means that the drop in the unemployment rate from 7.9% to 7.7% (SA) does not reflect any improvement in the economy.
Interestingly, the broader U-6 measure of un- and under employment declined from 14.6% to 14.4% (SA). The U-6 is made up of the 12.029 million unemployed (down 229,000 from October), the marginally attached (unemployed have looked for work in the last year but not the last month) 2.505 million (up 72,000), and involuntary part time workers 8.176 million (down 168,000) for a total of 22.710 million.
What I take to be 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, not seasonally adjusted) increased 353,000 in November to 6.495 million from 6.142 million, or a rough return to the September level.
As I always note at this point, this measure of the undercount does not reflect well changes in the economy. So 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% (as boomers retire I may have to adjust this figure). The difference between these two is my measure of the undercount.
.67(244.174million) = 163.597 million (where the labor force should be)
163.597 million — 155.291 million = 8.306 million (the real undercount)
This is an increase of 478,000 from the October number of 7.828 million, or approximately back to the September level. 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: 12.029 million (U-3 unemployment) + 8.306 million (undercount) = 20.335 million (up 249,000 from 20.086 million in October)
Real unemployment rate: 20.335 million / 163.597 million = 12.4 % (up from 12.3% in October)
Real disemployment: Real unemployment + involuntary part time workers = 20.335 million million + 8.176 million = 28.511 million (up 81,000 from 28.430 million in October)
Real disemployment rate: 28.511 million / 163.597 million = 17.4% (unchanged from October)
The long term unemployed decreased 216,000 from 5.002 million to 4.786 million. Because employment overall was down, I would assume most of this decrease came from workers being exited from the labor force by the BLS definitions.
By race, white unemployment decreased from 7.0% to 6.8% and African-American unemployment decreased from 14.1% to 13.2%, but again these declines are mostly from workers being removed from the labor force.
In the Establishment survey, the headline increase in jobs seasonally adjusted jobs was 146,000 from 133.706 million to 133.852 million. Essentially all of these were in the private sector (147,000 private sector vs. -1,000 public sector).
Unadjusted, net job increases totaled 367,000 going from 134.702 million to 135.069 million.
In terms of the mix of jobs, seasonally adjusted, retail trade gained 52,600, professional and business services 43,000, leisure and hospitality 23,000, and healthcare 22,000. Manufacturing lost 7,000 and construction 20,000.
Unadjusted (you know the place where we live), the whole story is unsurprisingly the Christmas retail trade which increased 466,000. Secondarily, leisure and hospitality declined 185,000. Wholesale trade changed remarkably little, rising by 10,000. Healthcare increased 53,000.
Weekly hours for all workers (private nonfarm) remained unchanged at 34.4 hours. Average hourly wages for all earners increased 4 cents to $23.63. Average weekly wages increased $1.37 to $812.87.
Weekly hours for production and nonsupervisory employees (blue collar/retail clerical) increased a tenth of an hour to 33.7 hours. Average hourly wages increased 3 cents to $19.84. Average weekly wages increased $2.99 to $668.61. This represents a 1.28% increase Nov. to Nov. The CPI has been running at 2.2%. So real wages remain in decline.
The November jobs numbers were not actually that good. They would have been at or below population growth levels if there had not been bleed through from seasonal retail positions. The mix of new jobs remained poor with most in lower paying professions. There continues to be little movement in hours and wage gains remain below inflation.
Unemployment declined but this was due to a contraction in the labor force and employment, neither good signs. October gains look like a fluke. Boomers began turning 65 in 2011 but the participation rate began heading south in 2001 and again in late 2008 after the meltdown. So it may take some time to tease out how much of the ongoing declines in the participation rate stem from the ongoing economic crisis and how much from secular trends (boomers retiring). And there could well be countervailing tendencies: boomers staying in the labor force because their savings and pensions have been decimated. In any case, November’s participation rate seasonally adjusted was 63.6%. January’s was 63.7%.
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 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