The Real Unemployment – The Good, the Bad & the Ugly

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To summarize, the jobs picture appears to be picking up slowly, very slowly, but the report by Gallup indicates it might not be all it seems – time will tell.

After losing 1.2 million from the work force in January, it is up .2% (50,000 people) in February – not sure I trust the 1.2 million people lost so this figure needs to be watched.

The total unemployment (U-6 on the BLS chart) as economists view the real unemployment, and which is not what is reported to the public, is down to 14.9% from 15.1%, but it is still unreasonably high.

If you go to the last two charts, you can see the comparison between this recovery and prior recoveries – it is not a pretty graph.

There is some solid growth in jobs. The jobs report shows a job growth of 227,oo0 which shows a steady increase for three months. The previous months were 223,00 and 284,000 respectively. They were mostly private sector jobs. The government cut 6000 jobs in February after almost four years of large job increases in the public sector.

Gallup showed unemployment at 9.1% but they do not adjust for seasonal employment (compensating for periods of higher temporary jobs such as during the holidays) which accounts for about a 5% difference. Gallup interviews half as many households to get their numbers which might account for the further difference. However, Gallup’s mid-month reading  non-farm payroll predictions generally correlate with the BLS releases two weeks later. Gallup’s mid-January reading improved to 8.3%, in line with what the BLS would report two weeks later. 

Gallup Unemployment

 

Part Time Employees Who Want Full-Time Employment

The labor participation rate, which includes people who are unemployed too long and have given up searching, went up .2% in February.It has steadily decreased since Obama took office which might correlate to some degree with his ongoing unemployment payouts and increased welfare payments.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2002 66.5 66.8 66.6 66.7 66.7 66.6 66.5 66.6 66.7 66.6 66.4 66.3
2003 66.4 66.4 66.3 66.4 66.4 66.5 66.2 66.1 66.1 66.1 66.1 65.9
2004 66.1 66.0 66.0 65.9 66.0 66.1 66.1 66.0 65.8 65.9 66.0 65.9
2005 65.8 65.9 65.9 66.1 66.1 66.1 66.1 66.2 66.1 66.1 66.0 66.0
2006 66.0 66.1 66.2 66.1 66.1 66.2 66.1 66.2 66.1 66.2 66.3 66.4
2007 66.4 66.3 66.2 65.9 66.0 66.0 66.0 65.8 66.0 65.8 66.0 66.0
2008 66.2 66.0 66.1 65.9 66.1 66.1 66.1 66.1 65.9 66.0 65.8 65.8
2009 65.7 65.8 65.6 65.6 65.7 65.7 65.5 65.4 65.1 65.0 65.0 64.6
2010 64.8 64.9 64.9 65.1 64.9 64.6 64.6 64.7 64.6 64.4 64.5 64.3
2011 64.2 64.2 64.2 64.2 64.2 64.1 64.0 64.1 64.1 64.1 64.0 64.0
2012 63.7 63.9
civilian labor force participation

The BLS graph below shows the participation rate for 16 years and over

The Bureau of Labor Statistics U-6 includes everyone and it is the real unemployment rate according to most economists. It stood at 14.9% down from 15.1% last month. It is the lowest since Obama took office, which is still the highest since WW II. It is reflective of the slow recovery – see last two charts. 

Table A-15. Alternative measures of labor underutilization

[Percent]
HOUSEHOLD DATA
Table A-15. Alternative measures of labor underutilization
Measure Not seasonally adjusted Seasonally adjusted
Feb.
2011
Jan.
2012
Feb.
2012
Feb.
2011
Oct.
2011
Nov.
2011
Dec.
2011
Jan.
2012
Feb.
2012
U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force 5.6 4.9 4.9 5.4 5.1 5.0 5.0 4.9 4.8
U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force 6.0 5.4 5.1 5.4 5.1 4.9 4.9 4.7 4.7
U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate) 9.5 8.8 8.7 9.0 8.9 8.7 8.5 8.3 8.3
U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers 10.1 9.4 9.3 9.6 9.5 9.3 9.1 8.9 8.9
U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force 11.1 10.5 10.2 10.6 10.4 10.2 10.0 9.9 9.8
U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force 16.7 16.2 15.6 15.9 16.0 15.6 15.2 15.1 14.9
NOTE: Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. Updated population controls are introduced annually with the release of January data.

Unemployment

The following compares this recovery to prior recoveries and the difference is stunning!

One of the most widely recognized indicators of a recession is higher unemployment rates. In December 2007, the national unemployment rate was 5.0 percent, and it had been at or below that rate for the previous 30 months. At the end of the recession, in June 2009, it was 9.5 percent. In the months after the recession, the unemployment rate peaked at 10.0 percent (in October 2009). Before this, the most recent months with unemployment rates over 10.0 percent were September 1982 through June 1983, during which time the unemployment rate peaked at 10.8 percent.

Compared with previous recessions, the higher proportion of long-term unemployed (those unemployed for 27 weeks or longer) in the recent recession and its post-recession period is notable.

NOTE: People are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. The unemployment rate is the number of unemployed persons as a percent of the labor force. (The labor force is the total number of employed and unemployed persons.) The long-term unemployment rate is the number of persons unemployed for 27 weeks or longer as a percent of the labor force. To learn more, see How the Government Measures Unemployment.

Unemployment rate and long-term unemployment rate, January 1948–December 2011, seasonally adjusted (in percent)

Source: Current Population Survey | Chart Data

 

 

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