Friday, October 5, 2012

Are September Employment Numbers Good News?

Photo Copyright 2012 by P-G Matuszak. All rights reserved.

 The Bureau of Labor Statistics released the latest Employment and Unemployment Economic Indicators Report for September 2012.

At initial glance it appears to be good news. The U3 Unemployment Rate normally used by the left dropped to 7.8%. The fact it took almost 4 years instead of 8 months should send warning sirens, though, since an unhampered normal market adjustment would have resulted in an approximate drop to 7.5% by September 2008 had unnecessary government intrusions not kept it inflated.

Another sign of not-so-bad news is that workforce participation did not fall significantly and remains at an abysmal 63.6%.

Private sector (civilian) job creation was reported at 418,000 new positions. However, that is strikingly lower than the number of people underemployed due to economic reasons which rose by approximately 600,000. What this indicates is that approximately 418,000 people gained temporary, part-time jobs while 182,000 or so people who had "steady, full-time" employment moved into part-time positions or shifted from one temporary job to another. The U6 rate remains unchanged at 14.7%. Percentage of long-term unemployed rose to 40.1%.

If the workforce participation were the same as it was four years ago, then the combined unemployed and underemployed rate would be closer to 23%. The numbers indicate that people are still not working. The numbers also count people taking two or more part-time jobs multiple times as though each job taken were by a separate person, thus skewing the numbers.

While the latest report should stir some level of optimism, it is, by and large, not strikingly great news. Again, people need to sit down and do some basic math. If you recall your basic statistics classes in college (as well as Econ 101 and 102), you know that you need to take all the statistics in conjunction as well as look at the data set (or sample population). With over 1/3 of working-age Americans not participating in the workforce, these numbers really are not so great.

Photo Copyright 2012 by P-G Matuszak. All rights reserved.
We still have over 18,775,000 people seeking jobs who cannot find one. We have 8.6 Million people that want and need full-time jobs who are stuck in part-time employment. We have 2.5 Million listed as "marginally attached". These are people who want jobs, have looked in the past year, but are not listed as part of the workforce and, therefore, not "unemployed". These people include military retirees looking for work. Since they receive a pension check, they are not eligible to file for unemployment "benefits", and are not counted in the workforce or the unemployment percentage. Adding that demographic back into the number of unemployed, the figure is closer to 21,275,000 unemployed. Increase that by the underemployed of 8.6 million (up by 600,000 in September), the total number of people unemployed and underemployed is a total of 29,875,000. That is nearly 30 Million people not able to work at their full potential due to the current economic conditions.