America's Unemployed Families

As most pundits and economists have noted, the employment situation in the United States has improved substantially since just after the Great Recession when the official U-3 unemployment rate hit a peak of 10 percent.  That said, recent data released by the Bureau of Labor Statistics shows one employment measure that has had a significant negative impact on American households and family units.

Let's open with a definition.  According to the Bureau of Labor Statistics a family is:

"...a group of two or more persons residing together who are related by birth, marriage, or adoption. The count of families is for "primary" families only, that is, the householder and all other persons related to and residing with the householder.  Families are classified either as married-couple families or as families maintained by women or men without spouses.  Families include those without children as well as those with children under 18."

In its most recent Employment Characteristics of Families data release, BLS statistics show that there were 80.889 million families in the United States in 2014, up slightly from 80.445 million in 2013.  Here is a breakdown of all American family units by ethnicity and race:

White - 64.476 million families - 79.7 percent of all families

Black or African American - 9.793 million families - 12.1 percent of all families

Asian - 4.374 million families - 5.4 percent of all families

Hispanic or Latino - 12.178 million families - 15.1 percent of all families

In 2014, there were 16.057 million families without an employed family member, down slightly from 16.127 million families in 2013.

Now, let's look at the percentage of American families have had no family member employed over the period from 2003 to 2014:

As you can see, during and just after the Great Recession, the percentage of all American families that had no family member employed grew significantly from 17.8 percent in 2008 to a peak of 20.2 percent in 2011, an increase of 2.4 percentage points or 13.5 percent.  Since then, the percentage of all American families that had no employed family member has declined very slightly to 19.9 percent in 2014, a drop of only 0.3 percentage points or 1.5 percent.  That is a rather insignificant decline in the percentage of American families with no employed member, particularly considering that the economy was more than five years into the post-Great Recession "recovery" during 2014.

In 2014, the percentage of families with no family member employed varied greatly by ethnic or racial background as shown on this bar graph:

By percentage, more than twice as many black families had no employed family member when compared to Asian families.

Here is a bar graph showing how the percentage of families with no employed family of each ethnic and racial group has varied since 2003:

Here are the minimums and maximums and current percentage for each ethnic and racial group and the year that the minimum and maximum occurred:

White 

- minimum 17.4 percent in 2007  

- maximum 20.2 percent in 2011

- current 19.9 percent

Black 

- minimum 21.1 percent in 2007 

- maximum 25.8 percent in 2011

- current 23.6 percent

Asian 

- minimum 10.1 percent in 2006

- maximum 12.7 percent in 2010

- current 11.5 percent

Hispanic 

- minimum 12.4 percent in 2007 

- maximum 15.8 percent in 2010 and 2011

- current 14.1 percent

It is also interesting to note that the percentage of households with no family member employed varies greatly by the gender of the head of the household.  In 2014, 25.6 percent of households that were maintained by a woman had no employed family member and 17 percent of households that were maintained by a man had no employed family member.  As well, both the husband and wife were employed in 47.7 percent of married-couple families.

It is rather surprising to see that more than 16 million American families have no one in the workforce and that the percentage of households with no family member working has changed little since the end of the Great Recession unemployment crisis.  Some of this can be attributed to the BLS definition of "unemployed" since, by definition, unemployed persons are those that are actively seeking a job.  It does not include those that do not have a job and are not actively seeking one (i.e. discouraged workers).  That said, this data shows us that there are still an elevated percentage of American households that have seen little to cheer about during this inter-recessional economic expansion.

Layoffs - What the Monthly U3 Data Doesn't Tell Us

Over the past two months, the combination of declines in the U3 unemployment rate, increases in the ADP employment numbers and a drop in new claims for unemployment (aka jobless claims) has some in the mainstream media touting that the end of the Great Recession is in sight.  That could well be but fortunately, the Bureau of Labor Statistics (BLS) provides us with even more data to chew on, namely, the rather frighteningly entitled "Mass Layoffs" news release.  This report seems to get very little coverage in the mainstream media but for those of us that have gone through periods of what is politely and innocuously termed "downsizing", the mere threat of a layoff is enough to cause various bodily sphincters to clench involuntarily.

For January, 2011, according to the BLS, there were 1534 mass layoff actions (seasonally adjusted) in that month alone involving 149,799 workers with each of the 1534 layoff actions involved at least 50 workers from a single employer.  When compared back one month to December 2010, the number of mass layoffs rose by 51 events and the number of initial claims increased by 11,807.

Here is a graph showing both the number of mass layoffs for the past 5 years and the number of initial claimants for the past 5 years, both seasonally adjusted:

Quite clearly, the number of mass layoffs has decreased by roughly 50 percent from its peak in early 2009 but you'll notice quite quickly that the number of layoffs has not decreased markedly over the past year (once again, despite the looming and ever-promised end to the Great Recession) and that the number is still elevated by about 40 to 50 percent from the period of time prior to the onset of the Great Recession.  That's some recovery, isn't it?

The numbers look even worse when they aren't put into the magical black box that seasonally adjusts data.  For January 2011, the number of mass layoff events was 2558 (a 66.8 percent increase over the seasonally adjusted number) and the number of newly minted redundant employees was 246,463 (a 64.5 percent increase over the seasonally adjusted number).  On a year-over-year basis (non-seasonally adjusted), compared to January 2010, the number of mass layoffs was down by 302 and the number of initial claimants was down by 32,216.

Here is a chart showing the distribution of new claimants by industry for the top 10 worst offenders:

The manufacturing sector in the United States is still suffering mightily.  Despite the length of the recession and the increase in consumer spending, manufacturing layoffs still accounted for 27 percent of all mass layoff events and 30 percent of initial claimants.  This is slightly down from last years 34 percent of events and 38 percent of initial claimants.  The hardest hit sectors of manufacturing were in transportation equipment and food.  That’s not a terrible surprise – well, maybe the food industry was a bit unexpected.

Geographically, the highest number of initial claims were found in California, New York and Pennsylvania.  Interestingly enough, the de-industrialized belt experienced the largest year-over-year decreases in initial claims - that means you Michigan, Ohio and Illinois.  Perhaps job cuts over the past decades have already pretty much decimated the employment pool in those areas.

As seems to be a rule of thumb for all things economic, there is more than one source of data and more than one way to present that data.  Here is another reference for layoff data provided by Challenger, Grey & Christmas, Inc., an executive outplacement company headquartered in Chicago.  This week, they released their planned layoffs data showing that employers planned to increase their job cutting to 50,702 in February 2011, the highest total since March 2010 and the second month in a row that increased layoffs were planned.  The job cuts for February were up 32 percent from January's 38,519 and 20 percent higher than the 42,090 planned for the month of February 2010.  This is the first year-over-year increase in monthly job cuts since May 2009, during the height of the Great Recession.

The largest portion of layoffs in February came from local and state government and non-profit employers which announced job cuts totalling 16,380 positions, up 196 percent year-over-year.  On top  of local and state level cuts, the United States Postal Service announced that it has cut 5600 positions.  Despite data showing that consumers are cracking open their wallets once again, the retail sector is coming off second worst with a planned increase in job cuts of 44 percent to 8360 in the month of February, up from 5755 in January.

The Challenger, Grey & Christmas report shows that year-to-date layoffs for the first two months of 2011 have been the worst in Michigan (8985 workers), California (7150 workers), Illinois (6122 workers) and the District of Columbia (5946 workers).

The layoff situation is only going to get worse as we move forward.  Two factors are working against American workers; the first factor is rapidly rising energy and commodity input costs which, in large part, cannot be passed along to indebted and under water consumers necessitating cuts in operating costs (i.e. layoffs) to maintain profitability.  The second factor working against American workers are the looming job cuts at the Federal level in the never-ending (or never-starting) battle to balance the budget deficit.  his will have a marked impact on the economy as a whole since mass layoffs result directly in less consumer spending which result in even further layoffs in the private sector.

This thing just never seems to end despite what some of the data says, does it?  To my untrained eye, it certainly doesn't look like the employment situation in the U.S. is going to return to historical norms any time soon.