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BLS Jobs Report Covering May 2013: About As Good As It Is Going To Get And Still Too Insufficient By Far

The short version: May is usually a strong month for job creation. So while seasonally adjusted job creation is reported at 175,000, it actually increased by 885,000. This puts the January-June job creation period in line with and slightly better than the last 3 years. The problem is that this is still a very slow growth rate insufficient to deal with the enormous ongoing shortfall in jobs. And the quality of jobs being created remains crap.

May is also traditionally a good month for employment. Again because of the different surveys, jobs do not equal employment. Actual employment grew by 708,000. However, unemployment also grew by 288,000. This combination reflects an influx of job seekers from those defined as outside the labor force. The official unemployment rate inched up to 7.6%, but it has little relation to reality. In terms of the trend, real unemployment is at 12.5% and real disemployment now is at 17.3%, only slightly improved from a year ago.
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Household/Employment Survey

Potential Labor Force
In May, the potential labor force as defined by the Civilian Non-Institutional Population over 16 (NIP) increased 188,000 from 245.175 million to 245.363 million. Multiplying this by the seasonally adjusted employment ratio for May (58.6%) gives a rough estimate of the number of jobs needed to keep up with population growth: .586(180,000) = 110,000.

Labor Force
Seasonally adjusted (trend line), the labor force increased 420,000 from 155.238 million to 155.658 million. Unadjusted (actual), the labor force grew 995,000 from 154.739 million to 155.734 million.

Participation Rate
The labor force participation rate (the ratio of the current labor force to the potential labor force) increased one-tenth of a percent seasonally adjusted to 63.4% while unadjusted it increased 0.4% to 63.5%. Since 2008, the participation rate has been in overall decline.

Employment
Seasonally adjusted, employment rose 319,000 from 143.579 million to 143.898 million. Unadjusted (actual), employment grew 708,000 from 143.724 million to 144.432 million. Unadjusted, we expect to see seasonal employment increase January-June. So far this year, employment has increased 2.818 million as compared to 2.783 million last year, a difference of only 35,000 or essentially the same.

Employment-Population Ratio
Seasonally adjusted, the employment population ratio was unchanged at 58.6%. It has been roughly at this level for the last 19 months. Unadjusted, it rose 0.3% to 58.9%.

Unemployment
Seasonally adjusted, the ranks of the unemployed grew 101,000 to 11.760 million. Unadjusted, unemployment increased by 288,000 to 11.302 million.

Unemployment rate
Seasonally adjusted trendline unemployment increased a tenth of a percent to 7.6%. Unadjusted, it grew 0.2% to 7.3%.

Analysis
This time of year with good weather and schools beginning to let out, we expect to see a large influx of people into the labor force (those either finding a job or looking for one). Both employment and unemployment go up. But we also need to keep in mind the longer term trends. The relative size of the labor force, as reflected in the participation rate, has been in decline for 12 years, a decline accelerated by the 2008 meltdown. Overall employment, as shown by the employment-population ratio, declined between 2001 and 2003, stablized and even grew slightly before plunging in 2008-2009. It has since stabilized but at a much lower level, essentially kept in place by a slow decline in unemployment.

Full Time vs Part Time Employment
Seasonally adjusted, full time employment (35 or more hours/week) increased 185,000 to 116.238 million, and part time employment (1-34 hours/week) increased 150,000 to 27.699 million.

Unadjusted, full time employment increased 969,000 to 116.643 million and part time employment declined 261,000 to 27.789 million

Involuntary vs. Voluntary Part Time Employment
Seasonally adjusted, involuntary part time workers (those who would work full time if they could) were essentially unchanged, decreasing 12,000 to 7.904 million. Unadjusted, this group decreased 91,000 to 7.618 million.

Seasonally adjusted, voluntary part timers increased 26,000 to 18.934 million. Unadjusted, they dropped 514,000 to 19.315. A May dropoff is not unexpected and is usually followed by a cliff dive in June. This may be correlated to the school year and vacation taking.

The U-6
The BLS' broader measure of un- and under employment, the U-6, decreased, seasonally adjusted 0.1% to 13.8%. Unadjusted, it was unchanged at 13.4%.

Seasonally adjusted, the U-6 is composed of 11.760 million unemployed, 7.904 million involuntary part time workers, and 2.164 million of the marginally attached (those who have no job but looked for work in the last year but not the last month), or 21.828 million total, a decrease of 94,000 from April.

[Standard note]
The BLS has a restrictive, though internationally recognized, definition of unemployment, that is without a job but have looked for one in the last 4 weeks. The marginally attached are not counted as part of the labor force and their use in the U-6 is an indication that this is what the BLS considers its functional undercount to be.

The BLS also has a more extended category: Not in Labor Force, Want a Job Now (seasonally unadjusted). In May, this increased sharply 864,000 to 7.193 million.

This category, however, does not usually reflect well actual movements in the economy. So I have developed a simple alternative to it. I calculate the size of where the labor force should be by multiplying the potential labor force of the NIP by a participation rate characteristic of a solid economic expansion (67%). The difference between this and the current labor force measures the size of the real BLS undercount, those who do not have jobs but would work if jobs were available to them. This then allows me to recalculate where real unemployment is and where real un- and under employment (disemployment) is.

.67(245.363 million) = 164.393 million (where the labor force should be)

Trend Undercount:
164.393 million — 155.658 million = 8.735 million, a decrease of 294,000 from April

Current Undercount:
164.393 million — 155.734 million = 8.659 million, a decrease of 869,000
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Real Trend Unemployment (that is seasonally adjusted):

11.760 million (U-3 unemployment) + 8.735 million (undercount) = 20.495 million, down 193,000

20.495 million / 164.393 million = 12.5% down0.1%

Real Unemployment Now (i.e. seasonally unadjusted) :

11.302 million (U-3 unemployment) + 8.659 million (undercount) = 19.961 million, down 581,000

19.961 million / 164.393 million = 12.1% down0.4%
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Real Trend Disemployment:

Real Trend Unemployment + involuntary part time workers seasonally adjusted = 20.495 million + 7.904 million = 28.399 million, down 205,000

28.399 million / 164.393 million = 17.3% down 0.1%

Real Disemployment Now:

Real Unemployment Now + involuntary part time workers seasonally unadjusted = 19.961 million + 7.618 million = 27.579 million, down 672,000

27.579 million / 164.393 million = 16.8% down 0.4%

Analysis
May is about as good as the January-June hiring period gets. Unadjusted or actual employment should top out in June, but 85%-95% of it has already occurred. Because the Household Survey is taken in the week of the month containing the 12th, the great influx of workers from the end of the school year (staff, teachers, and students) will not show up until the report covering June. Unadjusted, both the size of the labor force and unemployment will increase sharply in June.

My measures of Real Unemployment Now and Real Disemployment Now are as low as they are likely to get for the next 5 to 6 months. In trend terms, real unemployment is only one-tenth of a percent better at 12.5% than it was a year ago, and real disemployment, three-tenths of a percent lower at 17.3%. This illustrates a lack of any substantial improvement in the employment situation in the last 12 months, with both real unemployment and disemployment (un- and under employment) remaining at crisis levels.

Other
The number of long term unemployed (6 months or more) was essentially unchanged at 4.357 million, an increase of 4,000. The long term unemployed account for 37% (down 0.3%) of the U-3 unemployed.

White unemployment was unchanged (seasonally adjusted) at 6.7%. White teen unemployment was 21.6%. African American unemployment increased 0.3% to 13.5%. African American teen unemployment increased 2.1% to 42.6%.

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Establishment/Business/Jobs Survey

Jobs
Seasonally adjusted, jobs increased 175,000 in May to 135.637 million. This represents an increase of 178,000 in the private sector to 113.789 million, and a loss of 3,000 in government to 21.848 million. Monthly revisions increased the jobs total for March up 4,000 to 142,000 and April down 16,000 to 149,000, for an overall revision downward of 12,000.

Unadjusted, jobs increased 885,000 to 136.367 million. Private sector jobs increased 907,000 to 114.128 million and government jobs decreased 22,000 to 22.239 million.

Unadjusted, manfacturing added 40,000 jobs to 11.954 million; and construction added 193,000 to 5.848 million.

Unadjusted, private service-providing added 663,000 jobs to 95.459 million, of which retail trade added 127,000 to 15.0366 million; professional and technical services dropped 103,300 jobs to 8.0523 million; temporary help added 70,500 to 2.6593 million; educational services dropped 106,800 to 3.4185 million; and leisure and hospitality added 363,000 to 14.356 million.

Hours and Earnings
Average weekly hours for all employees (seasonally adjusted) was unchanged at 34.5 hours. Average hourly earnings increased one cent to $23.89 and weekly earnings increased 35 cents to $824.21.

Average weekly hours for production and nonsupervisory employees (blue collar and clerical, seasonally adjusted) increased one-tenth of an hour to 33.8 hours. Average hourly earnings increased one cent to an average of $20.08, and average weekly earnings increased 34 cents to $678.70.

Analysis
The 885,000 unadjusted growth in jobs looks somewhat better than the 708,000 unadjusted increase in employment from the Household survey. The Establishment survey has a smaller margin of error and has a smaller worker base. It does not include groups like agricultural workers and the self-employed, for example. At this point in the last 3 years, 88%-97% of the jobs created in the January-June period have been created. This year through May, job creation is running 107,000 better than last year. It is in line with and slightly better than the last three years to this point.

In terms of the trend (seasonal adjustment), the number of jobs remains 2.419 million below the January 2008 peak of 138.056 million. On the current trajectory of job creation, it would take about a year and a half to get back to this level. But it is important to keep in mind that the real jobs shortfall right now as represented by the number of real unemployed (see above) is 19.961 million. However this 20 million is itself not fixed being subject to population growth increasing it and baby boomer retirements possibly decreasing it.

Unadjusted, that is in actual terms, May was a pretty good month for job growth. But aside from a seasonal increase in construction, the overall quality of jobs, as indicated by which industries are creating them, remains poor. And this is further reflected in the fact that although the number of jobs was good and full time workers (from the Household survey) increased by almost a million, pay increased by the barest amount possible, and hours increased only slightly.

Household data (Employment/unemployment)
Statistical significance: +/ - 400,000
The A tables: http://www.bls.gov/cps/cpsatabs.htm
A 1 for most information and categories
A 2 Unemployment by race
A 8 Part time workers
A 9 Full time workers
A 12 Duration of unemployment
A 15 U 6 un- and under employment
A 16 Persons not in labor force

Establishment date (jobs)
Statistical significance: +/ - 100,000
The B tables: http://www.bls.gov/ces/cesbtabs.htm
B 1 Total jobs and jobs by industry/type
B 2 Weekly hours, all employees
B 3 Hourly and weekly earnings, all employees
B 6 Weekly hours, blue collar
B 7 Hourly and weekly earnings, blue collar

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Comments

Submitted by lambert on

Nice to know we've hit a high point...