The short form: In March, in the Household survey, the BLS undercount of those unemployed grew, and the labor force became smaller. It will take 6-12 months to know whether the declines we are seeing in the size of the labor force are cyclical or secular. The adjusted and unadjusted numbers for the labor force showed different pictures. Adjusted (trend line), the labor force fell with employment and unemployment also falling. That is nearly half a million workers left or were defined out of the labor force leaving the mix of the labor force little changed between employed and unemployed, and between full and part time. Unadjusted (where the economy is now), the decline in the labor force was smaller, 215,000 removed from the labor force. And the mix in the labor force was more positive. Employment increased 470,000 and full time employment grew by 605,000. Still while the unadjusted data were showing improvement, the rate of improvement showed some weakness as compared to the trend. Nor is any strength to be found in earnings with wages for all employees marginally increasing and wages for blue collar employees marginally declining. Neither wages nor hours have shown much improvement over the last 12 months. Average weekly hours for all workers still remain below 35, the definition of full time employment.
The business survey repeats the pattern suggested in the title. The adjusted numbers are fairly poor. The unadjusted numbers are stronger but weaker than the past two years.
Differences between the adjusted and unadjusted were reflected as well in my own calculations. Trend unemployment showed some worsening to 12.7% while current unemployment improved to 13.3%. Trend disemployment was unchanged at 17.4% while current disemployment improved to 17.8%.
The potential civilian labor force as measured by the non-institutional population over 16 increased 167,000 from 244.828 million to 244.995 million. The employment-population ratio declined a tenth of a percent to 58.5%. A rough estimate of the number of jobs needed to keep up with population growth in March is the product of these: .585(167,000) or 98,000. So the initial estimate of 88,000 jobs seasonally adjusted does not quite keep up even with population growth.
The actual civilian labor force, the big number in the March report, declined 496,000 seasonally adjusted from 155.524 million to 155.028 million. Unadjusted, the labor force declined 215,000 from 154.727 million to 154.512 million.
The unexpectedly large decline in the labor force in March, seasonally adjusted, resulted in a corresponding decline in the participation rate from 63.5% to 63.3%. (Each tenth of a percent represents about 245,000 workers.)
The number of employed decreased in March seasonally adjusted by 206,000 from 143.492 million to 143.286 million. Unadjusted, employment increased 470,000 from 142.228 million to 142.698 million. Unadjusted, this is still 1.341 million off the 2012 peak of 144.039 million (October) and 4.42 million off the pre-recession November 2007 peak of 147.118 million (and this does not take into account population growth). Also unadjusted, in March 2012 the employed grew 728,000, and in March 2011, they increased 869,000. So while the unadjusted number shows growth, it is less than in the last two years, and remains off the near and far peaks.
The unemployed decreased 290,000 seasonally adjusted from 12.032 million to 11.742 million. Unadjusted, they dropped 685,000 from 12.500 million to 11.815 million. In March 2012, unemployment dropped 526,000 and in March 2011, 482,000.
Both adjusted and unadjusted, the unemployment rate fell to 7.6%.
This month’s fall in unemployment (unadjusted) is larger than in the past two years even as the increase in employment is less than in the last two years. This indicates that about two-thirds of the drop in unemployment (unadjusted) came from unemployed shifting to employed while one third of the drop came from those exiting or defined out of the labor force.
Adjusted, the 496,000 drop in the size of the labor force is equal to the sum of the declines in employment (206,000) and unemployment (290,000). At this time of year, the adjusted and unadjusted measures of the labor force begin to converge. The drop in the adjusted number was a little larger than usual, but unusually the unadjusted size of the labor force fell. This means that the difference between these two labor force numbers is about two hundred thousand larger than expected at this point, which is to say that the unadjusted number is weaker than expected.
The number of full time workers (35 hours or more per week), seasonally adjusted, increased 62,000 to 115.903 million. This remains 5.972 million fewer than the peak in November 2007. Unadjusted, it increased 605,000 to 114.796 million.
In February, part time workers (1-34 hours per week) for non-economic reasons (which include those who work part time because of Social Security caps) increased 444,000 to 18.908 million. This sparked talk of whether this was the start of a trend fueled by retiring baby boomers. That has yet to be seen. This month the number in this category dropped 163,000 to 18.745 million.
Meanwhile, part time workers for economic reasons, i.e involuntary part time workers (adjusted) also fell in March 250,000 to 7.638 million. Unadjusted, they fell 564,000 to 7.734 million.
[Note: Full time and part time numbers do not sum to the labor force. So they should be viewed more impressionistically than in absolute terms.]
The adjusted broader U-6 measure of un- and under employment decreased half a percent to 13.8% while the unadjusted U-6 fell a whole percent to 13.9%.
The adjusted U-6 was comprised of the 11.742 million U-3 unemployed, 2.326 million of the marginally attached (looked for work in the last year but not the last month), and 7.638 million involuntary part timers, for a total of 21.706 million, down 902,000 from February. Unadjusted, the February increase was even more striking, a 904,000 increase to 19.500 million. This also showed a decrease in March, of 238,000, to 19.262 million.
[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 March, this decreased 43,000 from 6.842 million to 6.399 million.
This category, however, does not 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(244.995 million) = 164.147 million (where the labor force should be)
164.147 million — 155.028 million = 9.119 million, an increase of 608,000 from February
164.147 million — 154.512 million = 9.635 million, an increase of 327,000
Real Trend Unemployment (that is seasonally adjusted):
11.742 million (U-3 unemployment) + 9.119 million (undercount) = 20.861 million, up 318,000
20.861 million / 164.147 million = 12.7% up 0.2%
Real Unemployment Now (i.e. seasonally unadjusted):
11.815 million (U-3 unemployment) + 9.635 million (undercount) = 21.450 million, down 358,000
21.450 million / 164.147 million = 13.1% down 0.2%
Real Trend Disemployment:
Real Trend Unemployment + involuntary part time workers seasonally adjusted = 20.861 million + 7.638 million = 28.499 million, down 32,000
28.499 million / 164.147 = 17.4% unchanged
Real Disemployment Now:
Real Unemployment Now + involuntary part time workers seasonally unadjusted = 21.450 million + 7.734 million = 29.184 million, down 922,000
29.184 million / 164.147 = 17.8% down 0.6%
The long term unemployed, as defined by the BLS (active job seekers out of work 6 months or more) decreased 186,000 to 4.611 million. The long term unemployed account for 39.3% (down 0.6%) of the U-3 unemployed.
The improvement in the unemployment rate came from across the board decreases. White unemployment dropped 0.1% to 6.7%. African American unemployment declined 0.5% to 13.5%.
In the business survey, the private sector created 95,000 jobs, seasonally adjusted (trend line). Government lost 7,000, netting an anemic increase of 88,000 to 135.195 million. This contrasts with 205,000 increases in March 2011 and March 2012. Unadjusted (current), there was an increase of 759,000 jobs to 134.485 million, 684,000 in the private sector and 75,000 in government. Unadjusted, 539,000 were in the private service providing sector. Construction added 117,000. Manufacturing only 25,000.
While the unadjusted numbers look impressive, they are again not as strong as the two previous years. 901,000 jobs were created in March 2012, and 907,000 in March 2011.
Average weekly hours for all employees increased 0.1 hour to 34.6. This figure has not shown much change. It was 34.5 hours in March 2012. Average hourly earnings increased one cent to $23.82 and average weekly earnings increased $2.72 to $824.17. [The math on the weekly earnings looks suspect to me.] Average weekly earnings have increased 2.1% year over year.
Average weekly hours for production and nonsupervisory (blue collar) employees were unchanged at 33.8 hours. Average hourly earnings declined one cent to $20.03. Average weekly earnings declined 34 cents to $677.01. Average weekly earnings have increased 2.1% year over year.
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