The Bureau of Labor Statistics has released its employment report for December, 2010:
The unemployment rate fell by 0.4 percentage point to 9.4 percent in December, and nonfarm payroll employment increased by 103,000, the U.S. Bureau of Labor Statistics reported today. Employment rose in leisure and hospitality and in health care but was little changed in other major industries.
Good news, eh? There’s more. The broader U-6 measure fell, too, from 17% to 16.7%.
Riddle me this. How can the U-3 unemployment rate fall sharply, the U-6 unemployment rate fall sharply, the number of long-term unemployed remain essentially the same and the economy only create 100K jobs? Inquiring minds want to know.
I can only speculate that the BLS is jiggering the business birth/death ratio. But I’m open to other ideas.
Update
Tyler Durden explains the figures:
While today’s unemployment number came at a low 9.4%, well below expectations, the one and only reason for this is that the labor force in America has plunged to a fresh 25 year low. Assuming a reversion to the mean in the long-term average participation rate back to 66%, means that the civilian labor force, which in December came at 153,690, a drop of 260,000 from November, is in reality 157.6 million, a delta of 3.91 million currently unaccounted for. Maybe someone can ask Bernanke during his imminent presentation before Congress what happened to the unemployed population, which would have been 18.4 million if this labor force delta was incorporated, resulting in an unemployment rate of 11.7%.
Is the payroll seasonally adjusted?
Other than that, we might be at the limits of resolution in the data, and it might all really equal “flat.”
Unstated in my post is that the BLS numbers diverge quite a bit from the ADP job numbers which are nearly three times as high. They usually track pretty closely.
The anticipated number from the BLS was closer to 300,000.
BTW, remember my ongoing concern about food stamps? Related:
“The number of poor people in the U.S. is millions higher than previously known, with 1 in 6 Americans — many of them 65 and older — struggling in poverty due to rising medical care and other costs, according to preliminary census figures released Wednesday.”
Could part-time employment be becoming a new norm?
IOW, are the new jobs non-full time jobs, but workers (particularly w/ construction backgrounds) have accepted them and have reached a point where they don’t currently want full time?
(Going against this is that the average work week is up .1 hours, but that the overall situation, it doesn’t tell us about new jobs)
More construction workers must be competing for small repair and refurbishing jobs, certainly.
Could part-time employment be becoming a new norm?
I’ve been wondering that too – well, at least wondering if the % of part-time workers will go significantly up in the next few years. A friend of mine was just rehired by his previous employer after having been unemployed for over a year. But his former position was full-time, whereas his new one is part-time.
The distinction between part-time and full-time employment will grow increasingly insignificant in coming years. Except for the CBO which will see its estimated costs for PPACA go into a cocked hat.
According to the report, the average workweek outside of manufacturing and supervision was 33.6 hours. The BLS considers part-time employment to be under 35 hours. That definition makes it hard to break out a wide variety of work arrangements.
Have we reached the 99 week limit yet for enough people to have that contribute?
Steve
Here’s a chart to answer steve’s 99er question:
http://3.bp.blogspot.com/_Acut6xHQPVU/TMICWs34VRI/AAAAAAAAADY/wPtbbqH7ePE/s1600/99ers.JPG
One of the sommenters at Calculated Risk put that together, IIRC.
One of the COMMENTERS put that chart together. It has been attributed to Mr Slippery but I haven’t found the original comment and he doesn’t have a link to a site of his own, assuming he even has one.
Dave correctly points out that historically ADP has closely tracked reality. Let’s hope that fact prevails.
But after that, this report, and media/political accounts, are a sham. The jobs number was WAY below expectations. A disaster. Let’s hope that there is too much seasonal noise here to draw definitive conclusions.
Mr Slippery’s chart is the best thing I can find on this subject, but it isn’t perfect. To see why, understand what it is – he has taken the monthly job loss (or gain) figures and pushed them 23 or 24 months into the future. Thus the peak job losses were about two years ago, so the peak creation of 99ers should be happening about now. Unfortunately the thing that would be most interesting to know is the magnitude of this phenomenon, and this chart won’t give that. Some will have bounced back into the labor force.
Also, not all unemployed people are in parts of the country that were eligible for 99 weeks of UEC.
Thx Icepick. Busy recruiting more docs so we can influence the political system which leaves me short on time.
Steve
steve, I’m not sure whether or not to wish you luck!
There’s a nice summary of the various job reports on Zero Hedge. The details of which industries were hiring don’t look very encouraging.
http://www.zerohedge.com/article/what-job-reports-mean
It includes a link to a report explaining why the ADP report may have been wrong. Drew might find that interesting.
http://blogs.wsj.com/economics/2011/01/05/the-caveat-behind-the-strong-adp-jobs-gain/
The first link explains why the employment situation really isn’t going to improve much for quite some time. I don’t believe it either. It’s looking more like the great holiday season was driven by pent up demand and heavy discounts in the early shopping season. That doesn’t seem to be a likely driver for The Bernanke’s “sustained recovery.” Other signs that he doesn’t believe in the recovery are QE2 and his request that Congress raise the debt ceiling again and keep spending – but with a long-term plan to reduce spending and debt, of course.
I would like to stress other concerns that I came by recently, most notably that there is more fresh labor force entering the market as the companies can currently hire even if they wanted to hire people with next to no experience. And these are added only thanks to population growth. Add the fact that people who don’t work and don’t even consider applying to a job are out of the workforce officially, so these are not accounted for in the long-term unemployed numbers. This makes the forecasts a lot less sunny than otherwise. Let’s just hope companies stop those trends toward considering already employed applicants only.