06:40
Faizan
The population of the U.S. aged 16 and older (which the Bureau of Labor Statistics uses to calculate the employment rate) increased by 8 million from the month President Obama was sworn into office through last month. Yet the total U.S. labor force declined from 154.3 million to 153.9 million (using an apples to apples comparison of not seasonally adjusted statistics). The participation rate dropped from 66% at the end of 2008 to 63.4% last month. Economists tell us that we need 150,000 to 200,000 new jobs each month just to absorb the new entrants into the workforce - the difference between the number of workers retiring and high school and college aged kids entering the workforce. So we need 1.8 to 2.4 million new jobs annually just to break even.
The President's reelection staff is running a TV campaign ad showing all of the jobs created since he came into office and heralding an 8.1% unemployment rate. Here is where the "fuzzy math" comes into play. The total number of people employed in the U.S. the month he took office was 142.1 million. Last month, there were 141.99 million people employed or a net loss of about 100,000 jobs during his 3 1/3 years in office. Let's split the difference of what economists say is needed to just "tread water" in jobs and call it 2.1 million annually. We should have added 7 million jobs just to stay even, but we lost 100,000. Did anyone find it strange when the BLS released the April 2012 employment statistics and the unemployment rate dropped from 8.2% in March to 8.1% by adding 120,000 jobs -- but having 300,000 people drop out of the labor force (when the labor force should be increasing by 175,000 a month)? It seems as though we really had a shortfall of about 350,000 new jobs for the month -- certainly not a decline in the unemployment rate.
Where does this fuzzy math come from? There is a great deal of churn in the U.S. labor force. Each week, even in good economic times, about 370,000 people file for first time unemployment benefits -- or close to 1.5 million a month -- and there are another 19 million self-employed plus millions of contract and temporary workers. The BLS does a snapshot in time by contacting a sample of 60,000 households by telephone and face-to-face surveys each month. But what aren't counted, as part of the labor force, are the long-term unemployed, discouraged workers who have dropped out of the labor force and stopped looking for work. Hence, the fuzzy math -- 300,000 can disappear in one month when 120,000 jobs are added and the unemployment rate drops a one-tenth of a percent.
Gallup does a monthly survey of various employment statistics, considered by many to be more accurate than the BLS, and includes a category called Underemployment. Gallup's U.S. underemployment measure combines the unemployed with those working part-time but looking for full-time work, which currently stands at 18.2%, up 0.2% from last month but down from 19.3% the prior year month. This is a staggering 28 million people -- out of work or can only find part-time work.
The President's reelection staff is running a TV campaign ad showing all of the jobs created since he came into office and heralding an 8.1% unemployment rate. Here is where the "fuzzy math" comes into play. The total number of people employed in the U.S. the month he took office was 142.1 million. Last month, there were 141.99 million people employed or a net loss of about 100,000 jobs during his 3 1/3 years in office. Let's split the difference of what economists say is needed to just "tread water" in jobs and call it 2.1 million annually. We should have added 7 million jobs just to stay even, but we lost 100,000. Did anyone find it strange when the BLS released the April 2012 employment statistics and the unemployment rate dropped from 8.2% in March to 8.1% by adding 120,000 jobs -- but having 300,000 people drop out of the labor force (when the labor force should be increasing by 175,000 a month)? It seems as though we really had a shortfall of about 350,000 new jobs for the month -- certainly not a decline in the unemployment rate.
Where does this fuzzy math come from? There is a great deal of churn in the U.S. labor force. Each week, even in good economic times, about 370,000 people file for first time unemployment benefits -- or close to 1.5 million a month -- and there are another 19 million self-employed plus millions of contract and temporary workers. The BLS does a snapshot in time by contacting a sample of 60,000 households by telephone and face-to-face surveys each month. But what aren't counted, as part of the labor force, are the long-term unemployed, discouraged workers who have dropped out of the labor force and stopped looking for work. Hence, the fuzzy math -- 300,000 can disappear in one month when 120,000 jobs are added and the unemployment rate drops a one-tenth of a percent.
Gallup does a monthly survey of various employment statistics, considered by many to be more accurate than the BLS, and includes a category called Underemployment. Gallup's U.S. underemployment measure combines the unemployed with those working part-time but looking for full-time work, which currently stands at 18.2%, up 0.2% from last month but down from 19.3% the prior year month. This is a staggering 28 million people -- out of work or can only find part-time work.
Posted in: business
