The most recent employment situation report has not brought good news:
U.S. employers slammed the brakes on hiring over the last two months, raising new doubts the economy is strong enough for the Federal Reserve to raise interest rates by the end of this year.
Payrolls outside of farming rose by 142,000 last month and August figures were revised sharply lower to show only 136,000 jobs added that month, the Labor Department said on Friday.
That marked the smallest two-month gain in employment in over a year and could fuel fears that the China-led global economic slowdown is sapping America’s strength.
“You can’t throw lipstick on this pig of a report,” said Brian Jacobsen, a portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
Not only is the change in the number of jobs less than was expected but last month’s job figures have been revised to sharply downward. Job growth in both months was below the “natural increase”. Zerohedge has noticed that and points to the sharp decrease in the labor force participation rate, now the lowest it’s been in almost 40 years:
While the September jobs number was an absolute disaster, here is the real punchline: in September, the people not in the labor force soared by a whopping 579,000 to a record 94.6 million, up from the previous record 94.0, even as number of people employed – according to the household survey used to calculate the “5.1%” unemployment rate – tumbled by 236,000 to 148.8 million.
And as a result of this latest surge in people who aren’t working, nor want to work, the participation rate crashed yet again, and sliding from 62.6% to 62.4%, it was the lowest since October 1977.
Basically, things are moving the wrong way. We want less slack in the labor market not more.
However, I expect the UE stat to somehow go down, despite the underlying discouraging figures. That’s how it works these days. And, people will spit out said magical stats to support their premise that the economy is recovering and doing well.
O.K. Jan, I’ll bite. Please educate me on these people who no longer want to work or need to work. Details please, I want to join them.
The reduction in the work force is largely the result of an aging country. The baby boomers are reaching retirement age like me. Although I still sell some paintings and photographs I’m not officially part of the work force at 69. My sister (65) retired from her job a year and a half ago and although she still does some consulting she is not officially part of the labor force. My brother is 61 but few people want to hire someone that old. Although he has a long a successful career few employers even want to talk to him.
Sorry, Ron. Not really. The declines reside in the 25-54 age range, while the older worker part rate is pretty steady. But thanks for playing.
The actual data can be seen at zerohedge. A certain commenter here has been pointing out this issue for a good two years.
GS – go over to zerohedge; same post as the part rate by age analysis to see the supposed cause of “we don’t need no stinking work.” Some things just make you shake your head.
Ron, what the CBO said two years ago was that an aging population accounted for less than half of the change. It’s a factor but it’s not the only factor. Since it’s the factor you can do the least about, blaming the declining LFPR on an aging population is convenient for politicians but it’s an inadequate policy.
To the best of my knowledge the CBO’s study is the one most favorable to an aging population as an explanation. I’ve seen others that found a quarter or less.
I’ve been hammering away at this for at least five years, Guarneri, but who’s counting?
I’ve largely stopped caring enough to look for the numbers, though. It was tracking the drastic loss of full time jobs in the 25-54 range that did it. It’s really staggering to see two to three generations get hobbled like that and still have everyone that matters make like Kevin Bacon’s character at the end of Animal House.
At least I’ve got chess. The world and its rulers have told me to fuck off and die and take my family with me, which I absolutely will not do if only out of pure goddamned meanness. But at the chess board I am happy – there I, and only I, control my fate. So much better than poker….
Dave, looking at LFP by age even only tells part of the story. As I pointed out last year (I’d link to an old post but I’m on my phone), the full time employment % for those aged 25-54 was down over 3.5% from the start of the recession – and iirc the definition of full time employment has been “liberalized” in that period, so things are likely worse than that.
Whatever, in the face of cratering LFP and ever increasing automation the obvious solution is to import as many Mexicans, Syrians, and Congolese as possible. It’s our only hope to lead us into the post-post-modern economy of extremely high skilled workers doing extremely interesting & well remunerated work, amiright?
How anyone can look at our current leadership class as anything other than some combination of utterly corrupt and stupendously incompetent is beyond my ability to fathom.
” I’ve seen others that found a quarter or less.”
I have not. The Atlanta Fed covers this topic pretty regularly and puts it slightly over half. They break it down into fine detail, unlike zero hedge which just shows a few charts and makes vague assertions.
https://www.frbatlanta.org/chcs/LaborForceParticipation.aspx
Steve
Like all things of this nature, subjectivity surrounds data. Friday is the day that many of the big institutions put out their economic summaries. I get two. From the always wildly optimistic – and subsequently downward revised “unexpectedly” – JPMorgan we have an analysis of labor part rates from 2013 to current. In other words, now. About 55% of the part rate decline is attributed to prime agers, as a pct. In absolute numbers, ouch.
The. Fed, when it does it’s work, is forced to use surveys to attribute motive. WRT to the decline in the older workforce, a rather small pct of the decline is attributed to simple age. Much is sloughed off on disability. WRT to prime agers, much of the lack of participation is attributed to “don’t want a job” dominated by staying in school or lifestyle “I just want part time work.” Make what you will of surveys. But if you can convince yourself that this is really just an aging demographics or young and free lifestyle issue, you have to face the question of why employers don’t have to bid up wages to attract the remaining workers with Protestant work ethics.
Maybe today’s workers just enjoy minimal wage growth. Catholic guilt and sacrifice thingy I guess. I’m sure it’s not that waiter and waitress jobs aren’t that appealing…….
BTW – for those hanging their hat on the unemployment rate, JPMORGAN math says it takes only 50,000 jobs per month to hold the pct steady in the face of the declining part rate. Contrast that with 150,000 – 175,000 just to keep up with population. If you were an administration apologist you could cite the unemployment rate all day long, and win the Aldous Huxley award……
To be clear, I think we have a soft labor market. Not nearly enough jobs. The lack o wage growth substantiates that. I am just saying that I have not seen any source I found credible claiming that the drop in LFP was only 25% due to demographics. I think it is much more complicated that that, especially given that the drop started in 2000. If you ignore the bump in the early 2000s from the real estate bubble, you pretty much get a straight trend line down from 2000 to the present.
Steve
I’m too drunk to do proper research right now, but as I recall from when I looked at this many months ago, the LFP for the above 54 crowd has never been higher. I’m sure it’s true that many boomers are retiring, but compared to previous generations, they are many more remaining in the workforce. Probably lots of factors driving that – the boomer cohort’s inability to save for retirement despite all their economic advantages; longer lifespans, healthier living allowing people to work past 65, the increase in sedentary jobs that don’t require physical labor, etc. Point being, even if boomer retirements make up 50% of the LFP, the fact remains that their LFP is comparatively very high.