BLS Jobs Report, November 2010: Still Going Nowhere

The news that the media will be flogging on the Bureau of Labor Statistics (BLS) November report is that the U-3 unemployment rate jumped from 9.6% to 9.8% and that the economy added only 39,000 jobs. They may tell you that the private sector added 50,000. They may not tell you that 40,000 of these were temp jobs and the unsustainable healthcare sector accounted for another 19,000. Neither of these are good signs. A worse indicator is that going into the Christmas shopping season retail trade dropped 28,000 jobs. This suggests that retailers are trying to increase profits/decrease losses at the margins by reducing staff. Additionally, the September job losses were reduced from 41,000 to 24,000 and the October job increases were revised upward from 151,000 to 172,000, making October at least look like a fairly good month.

With that said, let's dive into the numbers. From the Household Survey (A-1 Table), the non-institutional population over 16 (NIP) increased by 185,000 in November. The employment-population ratio (the ratio of those currently employed to the NIP, the potential workforce) was 58.2%, a decline of 0.1% for the month. Multiplying the increase in the NIP by this ratio gives us 107,670, the number of jobs the economy needed to create in November just to account for population growth. So the economy needed a 107,670 jobs just to stand still but created only 39,000. That's a shortfall of 68,670.

As I said U-3 unemployment increased two-tenths of a percent to 9.8%. This represented 276,000 more Americans joining the ranks of the unemployed. Total U-3 unemployed now stands at 15.119 million.

Looking at the A-15 Table, the U-6 measure of un- and under employment remained unchanged at 17%. We calculate the number of Americans this represents by multiplying it by the civilian labor force of 154.007 million. This gives us 26.181 million for the un- and under employed.

According to the A-16 Table, the number of those not in the workforce but wanting a job, i.e. the BLS undercount decreased by 35,000 in November to 5.832 million. If we add these to the calculated number for the U-6, this gives us a total disemployment figure of 32.013 million. Increasing the workforce by this undercount gives 159.839 million. Dividing this into our disemployment number gives a disemployment rate of 20%.

Now if you have read any of my previous job report analyses, you know I calculate the undercount somewhat differently. I use a 67% workforce participation rate, that is a good recovery rate, and multiply this times the NIP. For November this would give an estimated workforce of 159.939 million. The difference between this and the November BLS workforce number of 154.007 million is 5.932 million up from 5.911 million last month. This gives a disemployment number of 32.113 million and with rounding a disemployment rate of 20.1%, unchanged from last month. Now while the BLS numbers are close to this, the principal difference is that they have been showing the undercount decreasing over the last few months. My numbers show it has been increasing.

The bottomline is that more people were unemployed in November while the figures for the disemployed stayed about the same with continued deterioration around the edges. October was a reasonably good month. We might have expected November to be as well, with Christmas coming on, but it wasn't. And that's the real story. Even with the odd good month here and there, we have a disemployment picture of ~20% with no end in sight. How long can the economy muddle on with that kind of a drag on it? And this is without even touching on all the landmines and bubbles in the domestic and international financial sectors.