Current Employment Commentary:
The U.S. Bureau of Labor Statistics (BLS) has released its preliminary estimates for the employment situation for the month of November 2013. The numbers are considered “preliminary” for two more months to adjust for late arriving data. “Non-adjusted” employment numbers increased by 421,000 from October to November while the Civilian Non-institutional Population increased by 186,000.
Employment peaked in November 2012 and from November to January 2013 the number of jobs fell drastically… it rebounded a bit in February through April but still didn’t quite reach November 2012 levels. Finally, in May 2013 the employment levels exceeded November 2012 levels by 747,000. In May, June and September employment topped 136 Million while in July and August it was in the mid-135 million range. Then in October and November 2013 employment topped 137 million. So from November 2012 through November 2013 the number of jobs increased by 2.3 million which sounds good until you realize that the Civilian Non-institutional Population increased by 1.785 million so the country overall is only slightly better off.
In November 2012- 135,636,000 (135.6 Million) were employed by June 2013 it was up to 136,805,000 (136.8 Million) an increase of 1.2 Million but in July employment levels fell back to 135,664,000 almost identical to November 2012 levels. August was only slightly better at 135.961 Million and in September the number had reached 136,600,000.
But somehow the “Unemployment Rate” says August was better than in November. The official “Seasonally Adjusted Unemployment Rate” shows a decrease from 7.8% in November to 7.3% in August. But employment in July is only slightly better than November… how can that happen? Also the Civilian Non-Institutional Population grew by 1,785,000 (just over 1 3/4 million, so although there were no more jobs but there are more people who need jobs).
From the chart, we can see that employment is nearing levels reached in 2007 when employment peaked at just over 139 million jobs. Once again we need to note that the total U.S. population (not just the “civilian non-institutional population) has increased from about 305 million to about 317.1 million during that time. With about 50% of the population in the job market that would mean that about 6 million more people are looking for jobs while there are actually still a couple of million fewer jobs available than in 2007.
BLS Changes Employment Numbers
For a while now I’ve been ranting about how the BLS changed the employment numbers all the way back to July of 1991. I contacted the Bureau of Labor Statistics and they curtly pointed me to a short hidden blurb on their website that supposedly explains why they did it. See BLS Changes Employment Numbers for our full discussion of this (pseudo) BLS explanation. Their justification was that they hadn’t properly counted all the “Property and Casualty insurers”. And somehow Property and Casualty insurers increased the total number of jobs by 104,000 in August 2010 and by 738,000 in December 2012. Boy there must have been a lot of Property and Casualty insurers hired during that couple of years of recession! You can see the difference between the old numbers and the new numbers on the above chart.
Note: The Employment rate and the Unemployment rate are based on two entirely different surveys but theoretically they should be two sides of the same coin. If you look at the chart above it does look like the employment rate is climbing i.e. more people are getting jobs as the trend channel does seem to be up.
By looking at the employment rate we will know how many jobs there are in our economy, pure and simple. (As Detective Joe Friday in Dragnet would say, “Just the facts Ma’am”). Are there more jobs than last year? Good! Are there fewer jobs than last year? Not good. Simple as that! But things have gotten a bit more complex with the implementation of Obamacare. It has inadvertently created incentives for companies to switch from full time employees to part-time employees thus two people may be considered employed where there used to be only one… except there is no additional work being done… but the numbers look better.
We need to consider the population factor. If the number of jobs stays the same but the population increases drastically then the unemployment rate will rise even though the number of jobs stayed the same. So looking at the unemployment rate is also important. Unfortunately, it still doesn’t give us the full picture. If the U.S. population is growing (and it is) but the number of jobs only holds steady the number of people without jobs will increase. So in order for the real unemployment rate to stay the same the number of jobs has to increase at at least the same rate as the population. If the number of jobs increases at anything less than the rate at which the population is increasing, the unemployment rate will be increasing.
Gallop poles look at the “P2P Rate” or Payroll to Population and has found that the number is surprisingly level from July 2011 to July 2012 to July 2013 at 44.9%, 45% and 44.7% respectively and in November 2013 the P2P was 43.7% worse than the preceding years (higher is better). The P2P looks only at those working over 30 hours a week. So, in other words, when taking population increases and full-time employment into consideration, the P2P says that the employment situation has not improved no matter what the official Unemployment rate says.
To determine the employment rate the U.S. government surveys 390,000 businesses nationwide every month. The raw number is what we use here and it is not seasonally adjusted. This number is considerably more reliable than the 60,000 households that they survey to obtain the unemployment rate. And I prefer it to the seasonally adjusted number. This survey is submitted by the businesses monthly based on company employment on the 12th of the month but for some reason the first release is considered preliminary to allow for late arrivals and it often changes significantly in later months (when the public is no longer watching). For instance the October 2012 number fell 90,000 from 134,792,000 originally released (prior to the election) to 134,702,000 after the election. So rather than more jobs appearing due to late arrivals they somehow overestimated the number of jobs by 90,000… hmmm.
See Current Unemployment Rate for an explanation of how the government calculates the official Unemployment rate.
Source: U.S. Bureau of Labor Statistics- Current Employment Rate Data
For more information See:
- Article: Employment vs. Unemployment how do they compare?
- Historical Employment Data Chart
- Current Unemployment Rate Chart
- Current Employment vs Unemployment Chart Are they really “two sides of the same coin”?
- What is U-6 Unemployment?
- The Misery index measures inflation plus unemployment and is a good measure of the discomfort of the country’s population.
- More Unemployment and Employment Charts
- 10 Awesome Jobs You Can Do From Home