The short version:
The government shutdown is over, and the Bureau of Labor Statistics has belatedly released its jobs report for September 2013. The seasonally adjusted numbers were little changed. Unemployment dropped a tenth of a percent to 7.2%. The real story is on the unadjusted side. September marks the end of summer and the beginning of the school year. The labor force declines as people leave or their jobs end. The official unemployment declines too as the unemployed leave as well. However, real unemployment (~12.4%) and real disemployment (~17%) remain high, and little changed.
Officially in the business survey, 148,000 jobs were added in September (seasonally adjusted). Although with all the revisions we have seen in recent months, this should be taken with a large grain of salt. At the same time, on the unadjusted side of the survey, the end of summer and the beginning of the school year are reflected in a loss of 350,000 private sector jobs and government adding 1 million.
Wages and hours worked, which are always seasonally adjusted, changed little or not at all last month.
Potential Labor Force
In September, the potential labor force as defined by the Civilian Non-Institutional Population over 16 (NIP) increased 209,000 from 245.959 million to 246.168 million. Multiplying this by the seasonally adjusted employment ratio for September (58.6%) gives a rough estimate of the number of jobs needed to keep up with population growth: .586(209,000) = 122,000.
In September, seasonally adjusted, the labor force increased 73,000 from 155.486 million to 155.559 million
Unadjusted, the labor force decreased by 435,000 from 155.971 million to 155.536 million. You will remember that the unadjusted labor force declined 1.225 million last month. August and September mark the end of the seasonal summer drop off in the labor force. There is usually a big rebuild in October. It will be interesting to see what the effect of the government shutdown, if any, will be on this.
The respective changes in the labor force are reflected in the participation rate, the ratio between labor force and the potential labor force as represented by the NIP. Seasonally, adjusted the participation rate was unchanged at 63.2%.
Unadjusted, it fell two-tenths of a percent to 63.2%, as we would expect with the fall in the unadjusted labor force.
In September, seasonally adjusted, employment increased 133,000 from 144.170 million to 144.303 million.
Unadjusted, it increased 142,000 from 144.509 million to 144.651 million.
Seasonally adjusted the employment ratio, the ratio of the employed to the potential labor force of the NIP, was unchanged at 58.6%.
Unadjusted, it was unchanged at 58.8%.
In September, seasonally adjusted unemployment fell 61,000 from 11.316 million to 11.255 million.
Unadjusted, it fell 557,000 from 11.462 million to 10.885 million.
As always, it is important to remember that the BLS uses a restrictive definition for unemployed. It does not mean without a job but want one. The BLS uses a jobseeker model. For the BLS, unemployed means without a job but have looked for one in the last 4 weeks.
Seasonally adjusted, unemployment fell one-tenth of a percent to 7.2%.
Unadjusted, it fell three-tenths of a percent to 7.0%.
The unadjusted numbers tell this end of summer tale. While employment rose and unemployment fell, both good signs, the decline in unemployed was substantially greater than the increase in employed, meaning that several hundred thousand workers exited or were defined out of the labor force and consequently, the size of the labor force declined.
Full Time vs Part Time Employment
Seasonally adjusted (trendline), full time employment (35 or more hours/week) increased 691,000 to 116.899 million from 116.208 million. Part time employment (1 to 34 hours/week) fell 594,000 from 27.999 million to 27.405 million.
Unadjusted, full time employment declined 560,000 to 117.308 million from 117.868 million. August is usually the peak month in the year for full time employment, so a dropoff of this magnitude is expected. Part time employment (actual) increased 702,000 from 26.641 million to 27.343 million.
While the signs for the changes between the seasonally adjusted and unadjusted numbers are opposite, the actual numbers mark a brief convergence between the two.
Involuntary vs. Voluntary Part Time Employment
Seasonally adjusted, involuntary part time workers increased slightly (15,000) to 7.926 million.
Unadjusted, they fell by 168,000 to 7.522 million from 7.690 million.
Voluntary part time workers, seasonally adjusted, declined 372,000 to 18.967 million from 19.339 million.
Unadjusted, voluntary part time workers increased by 1.45 million to 19.151 million from 17.701 million. This kind of large increase in September is expected but is actually 300,000 smaller than the increase seen last year.
[Standard Note: As usual, I will note that the distinction between voluntary and involuntary is often in the eye of the beholder. Part time workers for voluntary reasons include those who must work part time because of they are raising children, taking care of a relative, or on Social Security and must restrict their hours to stay below Social Security limits on income. For the workers involved, part time work often is not a voluntary choice.]
The BLS’ broader measure of un- and under employment, the U-6, dropped, seasonally adjusted (trendline) 0.1% to 13.6%. Unadjusted, it fell 0.5% to 13.1%.
Seasonally adjusted, the U-6 is composed of 11.255 million unemployed, 7.926 million involuntary part time workers, and 2.302 million of the marginally attached (those who have no job but looked for work in the last year but not the last month; a decrease of 40,000 from August), or 21.483 million total, a decrease of 86,000 from last month.
As said above, 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 September, this fell 516,000 to 5.775 million.
This BLS category does not often 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 Clinton boom was at or above this level for nearly 40 months). 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(246.168 million) = 164.933 million (where the labor force should be)
164.933 million — 155.559 million = 9.374 million, an increase of 67,000 from August
164.933 million — 155.536 million = 9.397 million, an increase of 575,000
Real Trend Unemployment (that is seasonally adjusted) :
11.255 million (U-3 unemployment) + 9.374 million (undercount) = 20.629 million, up 6,000
20.629 million / 164.933 million = 12.5%, unchanged from last month
Real Unemployment Now (i.e. seasonally unadjusted) :
10.885 million (U-3 unemployment) + 9.397 million (undercount) = 20.282 million , down 2,000
20.282 million / 164.933 million = 12.3%, unchanged from last month
Real Trend Disemployment:
Real Trend Unemployment + involuntary part time workers seasonally adjusted = 20.629 million + 7.926 million = 28.555 million, up 21,000
28.555 million / 164.933 million = 17.3%, unchanged from last month
Real Disemployment Now:
Real Unemployment Now + involuntary part time workers seasonally unadjusted = 20.282 million + 7.522 million = 27.804 million, down 170,000
27.804 million / 164.933 million = 16.9%, down 0.1%
This is a cumulative graph of seasonally adjusted disemployment, where we start with the unemployed, add in involuntary part timers, and finally add in my calculation of the BLS undercount. As we can see, unemployment upon which the official unemployment rate is based as gradually declined from its 2009-2010 plateau. This is consistent with the official Obama Administration narrative. But we can also see that beginning in November 2009, disemployment (the top line in the graph, and the sum of the unemployed, involuntary part timers, and my calculation of the BLS undercount) plateaued and has remained little changed since. This reflects the economy that most of us experience, the one where the recession never ended.
The number of long term unemployed (6 months or more) continued to drop (144,000) to 4.146 million. The long term unemployed account for 37% of the U-3 unemployed, once again unchanged.
White unemployment improved decreasing 0.1% to 6.3%. White teen unemployment decreased 1.2% to 19.3%. The more volatile African American unemployment decreased 0.1% to 12.9%. African American teen unemployment decreased 3.1% to 35.1%. Overall, African American unemployment remains at twice the white rate.
Seasonally adjusted the private sector added 126,000 jobs and government, 22,000 yielding the reported 148,000 total. The previous month revisions were mostly a wash. July jobs estimates were cut a further 15,000 down to 89,000. This is on top of last month’s 58,000 downward revision. August was revised upward 24,000 to 193,000.
Seasonally adjusted total nonfarm jobs were 136.290 million. Total private were 114.410 million.
Unadjusted, total nonfarm jobs increased 612,000 to 136.600 million. Private sector jobs declined 404,000 to 114.829 million.
The big story here is, as I noted last month, that the business survey registers in September the effects of the end of vacation/beginning of the school year. Consequently, private jobs decline and public jobs in education skyrocket. At the local government level, education jobs increased in September 882,600 to 7.6827 million, and at the state level, 346,600 to 2.4308 million.
Unadjusted, construction fell 26,000 to 6.061 million. Manufacturing fell 24,000 to 12.035 million.
Among our economy’s shit jobs, private service providing jobs fell 351,000, of which retail fell 80,700 to 15.147 million, transportation and warehousing were up 93,500 to 4.5125 million, information was down 17,000 to 2.671 million, financial services were down 51,000 to 7.904 million, professional and business services fell 31,000 to 18.729 million (of which temp jobs grew 64,200 to 2.8235 million), healthcare fell 31,700 to 14.604 million, leisure and hospitality dropped 468,000 to 14.368 million.
In all, unadjusted, government added 1.016 million jobs.
Hours and Earnings
Average weekly hours for all employees on private nonfarm payrolls was unchanged at 34.5 hours (the same as a year ago). Average hourly earnings increased 3 cents to $24.09/hour and average weekly earnings grew $1.04 to $831.11.
Average weekly hours for production and nonsupervisory (blue collar and clerical) personnel were unchanged at 33.7 hours (also the same as a year ago). Average hourly earnings increased 4 cents to $20.24 and average weekly earnings increased $1.35 to $682.09. This month blue collar and clerical workers, the bottom four-fifths of workers, did slightly better than the top fifth.
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