Sunday, November 7, 2010

When 151,000 new jobs make the news, times are desperate

On Friday morning, the United States Bureau of Labor Statistics released its monthly employment report for the month of October 2010.  In the report, they note that non-farm payroll employment increased by 151,000 in October and that the unemployment rate was unchanged at 9.6 percent.  As well, since December 2009, non-farm payroll employment has increased by 874,000

Times must be desperate.  When 151,000 new jobs are added to a pool of 14.8 million unemployed Americans, it is hardly a newsworthy item.  The market has added 1 new job in October for every 100 unemployed Americans, hardly a dent in the hemorrhage that has been the American labour picture since mid- to late 2008.   The report noted that 6.2 million people or 41.8% of the unemployed had been without work for more than 27 weeks, a very long time without work if you have bills to pay.  As well, the report indicated that the number of persons employed part-time for economic reasons (i.e. they can't find full-time work or their hours of work have been cut back) fell by 318,000 to a whopping 9.2 million persons.  An additional 2.6 million persons were "marginally attached to the labor force" up from 2.4 million a year earlier.   These are the unemployed that are not in the labour force, but they want to work, are available for work and have looked for work in the previous 12 months.  They are not included in the statistics because they had not searched for work in the 4 weeks preceding the survey, a rather interesting way of eliminating 2.6 million people from the official U3 statistics.  Among those, 1.2 million workers are what are classed as "discouraged workers" who are not looking for work because they believe that no work is available.  The number of discouraged workers is up 411,000 from a year earlier.  Another interesting statistic from the Employment Situation Summary Table shown below is the percentage of various demographic groups that are unemployed; approximately 15.7 percent of Blacks/African Americans are unemployed, the same percentage as in October 2009 and the highest unemployment in all seven demographic groups.  Here is the Employment Situation Summary Table as promised:

From the Shadow Statistics website, here is their take on the real unemployment situation in the United States:

The broadest measure of unemployment U6 includes short-term discouraged and marginally attached workers as well as those that are forced to work part-time because they cannot find full-time employment.  In October, U6 stood at 17.0 percent, roughly the same as it has been for the past 18 months.  The SGS (Shadow Government Statistics) Alternate Unemployment Rate "reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers who were defined out of official existence in 1994.".  In October, SGS unemployment stood at 22.5 percent also roughly were it has stood for the past 18 months, however, if one looks carefully at the blue line on the chart, it is quite apparent that this number is trending upwards with time (i.e. there are more long-term discouraged workers as time goes on).

To put the numbers, particularly the SGS Unemployment data into perspective, the unemployment rate in the United States was roughly 25 percent during the Great Depression.  The situation is really not that much better now.

In conclusion, while a gain of 151,000 new jobs is great for those who actually got them, it is but a tiny drop in the bucket (especially once the statistics are readjusted in the months to come) to those who are desperately looking for a job.  This has certainly been a jobless "recovery".

In the coming months, it will be interesting to see if Ben Bernanke's QE2 experiment will prove to be the miracle elixir that creates millions of jobs for Americans.  I'd be surprised.

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