The Brief Version
Because of yearly revisions, direct December-January comparisons are dicey. I will just note that, in the business survey, seasonally adjusted 197,000 jobs were added December 2012-January 2013 as compared with 113,000 this month, December 2013-January 2014. Keep in mind that anything below 200,000 is weak, and anything below 150,000 is bad.
Keep in mind too that seasonally adjusted numbers project trends and smooth out hills and valleys in the data. One of the largest of the valleys occurs December to January with the loss of jobs related to the holiday shopping season. So in fact, no jobs were created December-January. Rather 2.870 million were lost.
In the Household data, the official unemployment rate declined another tenth of a percent to 6.6%, highlighting once again the increasingly irrelevance of this measure to pretty much anything other than the desire of our elites to define out of existence an ongoing crisis they have no interest in dealing with.
The difference between the real and the trend is especially noticeable this month in the labor force numbers. Seasonally adjusted the labor force increased 523,000, that is 499,000 plus a Census adjustment of 24,000 to 155.460 million. That is 1.079 million more than the unadjusted number of 154.381 million. It will likely be May, four months from now, before the real (unadjusted) economy catches up to the seasonally adjusted levels.
The January report contains significant revisions to both the business and household surveys. In the business survey, revisions are made using March 2013 payroll data from the unemployment insurance system as a benchmark. This increased the March 2013 jobs number 369,000 seasonally adjusted and 347,000 unadjusted. However, this 347,000 increase is the result of the creation of a new category of employment in the business survey: private household employment involving services for the elderly and persons with disabilities. 466,000 such jobs minus a 119,000 sampling error yields the 347,000. If this category had not been included, then the unadjusted March benchmark revisions would have been negative 119,000, the sampling error. This would, of course, also affect the seasonally adjusted numbers as well.
The Census revisions to the Household data are, by contrast, much more minor. The labor force was increased by 24,000, with 22,000 more employed and 2,000 more unemployed.
Potential Labor Force
In January, the potential labor force as defined by the Civilian Non-Institutional Population over 16 increased 170,000 from 246.745 million to 246.915 million. Multiplying this by the employment-population ratio (58.8%) yields 100,000, a rough indicator of the number of jobs needed to keep up with population growth. By this measure, the economy went nowhere in January.
Seasonally adjusted, the labor force increased 523,000 from 154.937 million to 155.460 million. This is 239,000 smaller than January a year ago and the second month the labor force has shrunk. This looks to be a combination of Boomers retiring and a failure to create for younger workers.
Unadjusted, it decreased 27,000 from 154.408 million to154.381 million. This is a decline of 413,000 from a year ago.
The differences between these seasonally adjusted and unadjusted numbers are reflected in the participation rate, that is the ratio of the labor force to the potential labor force. Seasonally adjusted, the participation rate, increased two-tenths of a percent to 63.0%.
Unadjusted, it fell one-tenth of a percent to 62.5%.
Seasonally adjusted, employment grew 638,000 from 144.586 million to 145.224 million.
Unadjusted, it fell 1.162 million from 144.423 million to 143.261 million.
This discrepancy again illustrates the difference between the trend anticipating employment growth in the spring and current employment reflecting post-holiday employment losses.
Seasonally adjusted, the E-P ratio grew two-tenths percent to 58.8%.
Unadjusted, it declined four-tenths percent to 58.1%, still 0.2% better than a year ago.
Seasonally adjusted, unemployment fell 115,000 from 10.351 million to 10.236 million.
Unadjusted, it increased 871,000 from 9.984 million to 10.855 million. Taken together with the decrease in employment, this indicates 291,000 workers left the labor force in January.
Seasonally adjusted, unemployment declined one-tenth percent to 6.6%.
Unadjusted, it grew five-tenths percent to 7.0%.
Full Time vs Part Time Employment
Seasonally adjusted, full time employment increased 378,000 from 117.278 million to 117.656 million. Part time employment increased 168,000 from 27.372 million to 27.540 million.
Unadjusted, full time employment fell 887,000 from 116.661 million to 115.774 million. And part time employment decreased 10,000 from 27.762 million to 27.752 million.
Involuntary vs. Voluntary Part Time Employment
Seasonally adjusted, involuntary part time workers dropped 514,000 from 7.771 million to 7.257 million. Voluntary part timers grew 434,000 from 18.731 million to 19.165 million.
Unadjusted, involuntary part time employment fell by 219,000 from 7.990 million to 7.771 million. Voluntary part time workers increased 279,000 from 19.194 million to 19.473 million. It will be interesting to see if the January increase in voluntary part time workers is a fluke or a sign that involuntary part time workers are being converted to voluntary ones as they hit retirement age.
The U-6, the BLS’ broader measure of un- and under employment fell 0.4% to 12.7%.
The seasonally adjusted U-6 was composed of 10.236 million unemployed, 7.257 million involuntary part time workers, and 2.592 million of the marginally attached (those who have no job but looked for work in the last year but not the last month; an increase of 165,000 from December), or 20.085 million, a decline of 464,000 from last month.
The unadjusted U-6 increased five-tenths of a percent to 13.5%.
The BLS uses a restrictive job seeker 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 January, this increased 576,000 to 6.508 million and accords with the drop in the unadjusted labor force.
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.
I had intended to adjust the ideal participation rate this month in light of Boomer retirement but due to real life demands I will incorporate this change beginning next month.
.67(246.915 million) = 165.433 million (where the labor force should be)
165.433 million — 155.460 million = 9.973 million , a decrease of 409,000 from December
165.433 million — 154.381 million = 11.052 million, an increase of 141,000
Real Trend Unemployment (that is seasonally adjusted) :
10.236 million (U-3 unemployment) + 9.973 million (undercount) = 20.209 million, down 524,000
20.209 million / 165.433 million = 12.2%, down 0.3%
Real Unemployment Now (i.e. seasonally unadjusted) :
10.855 million (U-3 unemployment) + 11.052 million (undercount) = 21.907 million, up 1.012 million
21.907 million / 165.433 million = 13.2%, up 0.6%
Real Trend Disemployment:
Real Trend Unemployment + involuntary part time workers seasonally adjusted = 20.209 million + 7.257 million = 27.466 million, down 1.038 million
27.466 million / 165.433 million = 16.6%, down 0.6%
Real Disemployment Now:
Real Unemployment Now + involuntary part time workers seasonally unadjusted = 21.907 million + 7.771 million = 29.678 million, up 793,000
29.678 million / 165.433 million = 17.9%, up 0.4%
The real disemployment and unemployment figures mark the current upper limits of these categories, both in annual terms and before revision to the ideal participation rate.
The number of long term unemployed (6 months or more), as defined within the BLS job seeker model, decreased 232,000 to 3.646 million. The long term unemployed account for 36% of the U-3 unemployed, a decrease of 1%.
White unemployment decreased two-tenths percent to 5.7%. White teen unemployment decreased 0.5% to 17.5%. African American unemployment increased 0.2% to 12.1%. African American teen unemployment decreased 2.5% to 38.0%.
Employment of women head of household (i.e. single moms) increased 110,000 to 9.340 million.
Seasonally adjusted, the number of private sector jobs increased 142,000 and decreased 29,000 in government resulting in the net 113,000 increase. November jobs were revised upward again 33,000 to 274,000. December’s poor showing remained poor with a minor upward revision of 1,000 to 75,000.
Seasonally adjusted, total nonfarm jobs increased 113,000 to 137.499 million. Total private jobs increased from 115.544 million to 115.686 million.
Unadjusted, total nonfarm jobs fell 2.870 million from 138.266 million to 135.396 million. Total private jobs decreased 2.346 million from 116.058 million to 113.712 million. Government jobs declined 524,000 from 22.208 million to 21.684 million.
Unadjusted, where the economy is now, construction lost 240,000 jobs to 5.533 million. Manufacturing lost 83,000 to 11.965 million.
Unadjusted, the super sector private service-providing dropped 2.019 million to 95.339 million, of which retail fell 660,100 to 15.1688 million, professional and business services lost 358,000 to 18.545 million, of which temp jobs fell 191,500, healthcare lost 91,400 to 14.5585 million, and leisure and hospitality dropped 313,000. State government lost 211,000, all in education. Local government lost 279,000 jobs, of which 228,300 in education.
Hours and Earnings
Average weekly hours for all employees on private nonfarm payrolls remained unchanged at 34.4 hours (the same as a year ago). Average hourly earnings increased 5 cents to $24.21/hour, and average weekly earnings grew $1.72 cents to $832.82. for a 1.9% increase yoy.
Average weekly hours for production and nonsupervisory (blue collar and clerical) personnel were also unchanged at 33.5 hours (a tenth hour less than a year ago). Average hourly earnings increased 6 cents to $20.39/hour. Average weekly wages increased $2.01 to $683.07, a 1.9% increase yoy.
Household data (Employment/unemployment)
Statistical significance: +/ – 300,000
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: +/ – 90,000
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