Friday, December 6, 2013

Nov. '13's (Economic) Numbers Run

The Bureau of Labor Statistics released its November 2013 Economic Indicators and Employment Situation Report. There is good news and bad. U3 Unemployment is down to 7.0%. The Workforce Participation Rate (WPR) or Labor Participation Rate (LPR) is down to 63.0%.

Let's do some layperson's analysis on what these numbers mean to the national economy and to the individuals.

The decline in the U3 rate came from mostly 2 major factors. First, many government contractors and federal workers that were furloughed were listed as "laid off" or temporarily unemployed in early October. Many of those federal workers returned to work quickly. However, the contracting process, particularly within the DoD, requires a little time for the budgetary spending to trickle down to the contracted worker level. Many of them returned in late October through mid-November. However, the total number of government job positions has decreased.

The second factor is seasonal hires. In many areas, mostly the Southern States, the harvest season continues through November. This accounts for seasonal hires for the harvest season. In addition, retail and manufacturing increased. These most likely came in preparation for the holiday season and may continue the trend through December.

The BLS report claims that the workforce increased by a small number, yet not large enough to change the WPR/LPR, at least in a positive direction. It still remains at a 35 year low, having not seen this low of a participation rate since the Carter Administration. 63% of eligible workers are actively either working or looking for employment. October's numbers were revised downward, to 62.8% while Septembers were adjusted up, slightly, to 63.2%. That means, even with the hiccup of the "shutdown", the WPR for November is still lower than September, which is lower than August, and still continues a downward trend. Also, if you look at BLS's own numbers, the WPR is really 62.98%, but rounded up.

In addition, the average number of hours worked by full-time hourly wage workers is listed as 34.5 hours per week, more than an hour a day less than the preferred 40-hour week. Non-supervisory hours are lower at 33.7 hours per week. Before the BLS changed its definition of "full-time" to 30 hours per week, 35 hours per week was the defining line. So, the current average hours per week worked is lower than what was considered "full-time" prior to the Obama Administration.

Fewer people in the workforce. Those in the workforce working fewer hours. The U3 rate of 7.0% seems less like positive news when seen in full context.

The U6 rate (includes people stuck in part-time positions while seeking full-time employment) cannot be accurately determined by the BLS's data, since they inaccurately define "full-time" as 30 hours per week, while most Americans still define "full-time" as closer to a 40-hour average. By BLS's numbers, U6 is 11.99%. Since they can round up the WPR, we can round this up using the same rules, to 12.0%.

If the same percentage of the population were willing to be in the workforce as November '08, the numbers would look a lot more dismal.

If WPR were 65.9% (Nov. '08)
U3 would be 11.1% (4.1% higher than the current BLS report)
U6 (with 30hr cut-off) would be 15.9%  (3.9% higher than the current BLS report, and would be even higher if part-time were 34.9 hours a week, average, or fewer)

The reported U3 of 7.0% is a sign of very minor improvement, that is until the big picture is taken into account. It's a better holiday season than last year, but still much worse than 5 years ago, at the height of the "recession".