Historically employment is is closely tied to recessions and that is no accident. One of the primary factors in calculating whether the economy is officially in a recession is an increase in the unemployment rate.
But defining the unemployment rate is more difficult than you would expect with different “levels” of Unemployment based on how long you have been unemployed and whether you have actually been looking for a job or not. The government has 6 different classifications of Unemployment from U-1 to U-6.
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See What is U-6 Unemployment? for more details.
Employment Levels During Recessions
In this chart we can see the historical employment figures from 1939 through the present. But in addition to the number of jobs we can also see the recessions shaded blue as per the official description of a “recession” by the National Bureau of Economic Research (NBER). As you would expect, recessions correspond pretty well to the declines in employment (i.e. increased Unemployment) especially since unemployment is one of the factors NBER uses to determine whether there is an official recession. Although there are periods that are classified as official recessions where the number of people that are employed has not fallen significantly.
The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP as some organizations do. Instead, they define a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”. So even if GDP or employment don’t decline but other factors do, NBER can still classify it as a recession. Also they measure a “cycle” from peak to trough. When these factors start declining they say the recession started and when it starts rising again they say it ended. Even though times may still be fairly good when it starts declining and they may still be fairly bad when it starts rising. Also if you look at the two periods during the early 1980’s with a small break in between you will see that it was probably a recession during the whole period and it never really recovered in between.
One thing we can see from the chart is that the recent employment drop was one of the steepest declines since 1939 and had one of the longest duration recessions during that period (unless we consider the entire period from January 1980 until November 1982 as a recession). Supposedly, according to official calculations there was a brief period between the two recessions… in actuality there really wasn’t much recovery during that period and employment was basically flat.
The other thing to note is the recovery beginning in 2011, which looks fairly impressive until you realize the it took until June of 2014 to exceed the employment levels of November 2007 and by that point the civilian non-institutional population had grown from 232.939 million to 247.814 million (or almost 16 million). Meaning that we should have at least 7 million more jobs just to break even (since the payroll to population ratio is about 45%).
Historical Employment Data: How Many People are Employed?
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To Zoom in and just see the recent employment data (since 2000) without recessions go to Current Employment Data.
Source: This chart shows the actual number (unadjusted) of Non-farm jobs in the United States as tracked by the U.S. Bureau of Labor statistics. Historical Employment Data Series CEU 0000000001
You would think tracking Employment data should be much more straight forward than tracking Un-Employment. If you work for an employer for as little as 1 hour a week, your employer reports the existence of that job to the Bureau of Labor Statistics. Every month the Bureau of Labor Statistics surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual work-sites in order to provide data on employment, hours, and earnings of workers on non-farm payrolls. They tabulate this in their Current Employment Statistics (CES) program. About 40% of the establishments surveyed are businesses with fewer than 20 employees but this survey generally does not include self-employed individuals. But for some reason the BLS went back 20 years and changed all the numbers in January of 2013 (only a little at first but the difference grew larger as time went on) See BLS Changes Employment Numbers for the details.
Theoretically, the employment data presents a much more reliable way of looking at jobs than the unemployment rate. From the following chart of Historical Employment Data you can see the number of jobs that are filled at any given time and thus the number of people that are actually employed. If the employment numbers are falling that is bad and usually is correlated to a recession. If the number of jobs increases that is good and generally means the economy is picking up. The number of jobs bottomed in January 2010 at 127.3 Million then rose to 131.5 Million in November 2010. Unfortunately nothing rises in a straight line and so then it lost 3 million and got back down to 128.3 Million in January of 2011. In June of 2011 we topped November’s number by reaching over 132 Million but the number of jobs fell in January 2012 to 130.6 million and then began rising again to reach 134.5 million people employed in June of 2012 then rose to 135.6 million in November 2012 and fell to 132.6 million in January and rising back to 134.485 million in March and 137.942 million in November 2013.
One obvious reason for the massive increase in jobs since 1939 is the increase in the population, another is the exodus from farms to non-farm labor, taking jobs as everything from car mechanics and welders to IT professionals. Another reason is due to the increasing number of women entering the workplace, all of these factors would put an increasing percentage of the Civilian population into the workforce. One counterbalancing trend is the decrease in teenage employment, since 2000 the employment rate for teenagers has fallen from 45% to below 25%.
See Teenage Employment Plunges. Another factor is people retiring early perhaps due to downsizing and being unable to find another job, although some people of retirement age have found it necessary to take lower paying jobs, thus the increase in seniors in retail positions such as Walmart greeters and cashiers, which tends to make it more difficult for teenagers to find jobs.
… A report in the Financial Times told us that the number of people with jobs in the US has now [ed. note -June 2014] returned to the levels of 2007. In other words, at least in terms of employment, the economy has finally recovered – after seven years. Of course, this is not exactly true, or even remotely true.
With a population growth of about 1% per year (immigration and births), there must be about 20 million more people in the US today than there were seven years ago. That the raw number of people with jobs has returned to 139 million is hardly an achievement. Assuming about half the new people are of working age, it leaves about 10 million more Americans idling on the shoulders of economic life. ~ Bill Bonner
For more Information See:
The Misery index measures inflation plus unemployment and is a good measure of the discomfort of the country’s population.
Current Employment vs Unemployment Chart Not just two sides of the same coin.