Friday, May 4, 2012

April Employment Numbers

Caption: An empty storefront in Federal Way, WA. It's been empty for several years now, along with a good portion of Federal Way's retail space. Nothing seems to be changing here. Image credit: Cujo359

The April employment numbers from the Bureau of Labor Statistics are out, and here's what they say in a nutshell:

Nonfarm payroll employment rose by 115,000 in April, and the unemployment rate was little changed at 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, retail trade, and health care, but declined in transportation and warehousing.

Both the number of unemployed persons (12.5 million) and the unemployment rate (8.1 percent) changed little in April. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (7.5 percent), adult women (7.4 percent), teenagers (24.9 percent), whites (7.4 percent), and Hispanics (10.3 percent) showed little or no change in April, while the rate for blacks (13.0 percent) declined over the month. The jobless rate for Asians was 5.2 percent in April (not seasonally adjusted), little changed from a year earlier. (See tables A-1, A-2, and A-3.)

Here's the top portion of Table A-1, which is the totals for the entire workforce:

Table A-1.(Totals only) Employment status of the civilian population by sex and age [Numbers in thousands]
Employment status, sex, and ageNot seasonally adjustedSeasonally adjusted(1)
Civilian noninstitutional population239146242604242784239146240584242269242435242604242784
Civilian labor force152898154316153905153420153887154395154871154707154365
Participation rate63.963.663.464.26463.763.963.863.6
Employment-population ratio58.458.358.558.458.558.558.658.558.4
Unemployment rate8.78.47.798.
Not in labor force862488828888879857268669787874875648789788419
Persons who currently want a job648260416328651863856319637862996366
Footnotes (1) The population figures are not adjusted for seasonal variation; therefore, identical numbers appear in the unadjusted and seasonally adjusted columns. 

I've highlighted two numbers, the workforce participation rate, and the employment to population ratio (commonly abbreviated as "EPOP"). These numbers, particularly the EPOP, are more important than the commonly cited unemployment numbers right now. It's not hard to find folks who are willing to ignore EPOP and try to look on the bright side of numbers like this, unfortunately, they're wrong.

The workforce participation rate is the lowest it's been in almost thirty years. This chart from Zero Hedge illustrates:

Image credit: Zero Hedge

[Click to enlarge.]

As that ZH link explains, the reason that the unemployment numbers are dropping is because the participation rate is dropping. A lower LPR is worse, not better.

The EPOP is important here, too, because if we're in a recovery after an economic downturn, that number should be increasing. Instead, as you can see in the Table A-1 excerpt, it's decreasing. In times of prosperity, that number might also be decreasing, but that would be because more people can afford to leave the workforce early. That's not the case here. People are leaving the workforce because there's no work. How can that be, when the BLS numbers say that there were 115,000 new jobs? Robert Reich explains:

We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.

With only 115,000 jobs in April, the hole is getting even deeper.

The Stall Has Arrived

That 125,000 number is the subject of some debate among economists. Others calculate it somewhat differently. Dean Baker usually says 90,000 jobs are necessary each month to keep up with growth in the potential workforce. I use 100,000 jobs because it's a nice, round number that's roughly in the middle of all those estimates. At best, we added 25,000 net jobs this month, which is nowhere near the 125,000 that Reich rightly sees as a minimum net monthly increase to climb out of this depression.

Talking about how getting the U-1 unemployment number down to eight percent will help President Obama this election might be a persuasive assertion for those inside the DC bubble. To those outside of it, though, it should be utter nonsense. This is why I wrote “All Economics Is Local”. Eight percent, or ten percent, are just meaningless numbers. What matters to us out here beyond the beltway is whether our economy looks better. There’s not some magical unemployment number that’s going to make things look good. What matters is if we’re able to find jobs, and whether those jobs pay as well as the ones we had. For those about to “retire early”, all that matters, too, plus what shape the safety net is in, and whether they can get medical care when they need it.

Image credit: Parody by Cujo359 (See NOTE1)

The Obama Administration has done practically nothing to help any of that. It’s still wringing its hands about “fiscal responsibility”, when what it should be doing is telling us that when money is this cheap (interest rates being essentially zero at the Fed), it’s time to run deficits so we can invest in America. They should be having bankers doing the perp walk by the hundreds to show that no one gets to commit control fraud on such a massive scale and get away with it. They should really be helping homeowners who are losing their homes, either because the mortgages they're paying off are now exorbitant, or through deliberate fraud.

They won’t do any of that, of course, because the people who matter don’t want it, and not enough progressives will take their votes elsewhere to matter.

The economy is not going to save the Obama Administration from defeat this fall. Only Republican incompetence can do that.

NOTE1: To the best of my knowledge, this is an original parody by Cujo359. It is the official poster for the Campaign To Keep America Sucking Somewhat Less, a not-quite-existent non-SuperPAC project of the North American Division, CONUS Operations Directorate, of the Cujo Labs.

Feel free to copy it and pass it on. Just don't forget to give credit where it's due.

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