Report from the U.S. Department of Labor statistics:
The Unemployment rate fell in January to 9.7% from 10.0% in December.
Nonfarm payroll employment held nearly level (-20,000) in January after a big drop in December (-150,000 [revised]), and a boost to prepare for the holiday season in November (+64,000 [revised]). The December drop could substantially be the result of seasonal employees let go by retailers. Previous month changes were October (-224,000 [revised]) , September (-225,000 [revised]), August (-211,000 [revised]), July (-344,000 [revised]), June (-504,000), and May (-347,000).
The monthly average nonfarm payroll job layoff figures have been improving steadily over the last 9 months of January through November (-35,333), October through August (-220,000), and July through May (-398,333).
In 2009, payroll employment declined by 4.5 million. Over the course of the year, job losses moderated considerably. In the first quarter of 2009, job declines averaged 752,667 per month, compared with 103,000 per month in the last quarter.
Since the start of the recession in December 2007, payroll employment has decreased by 8.4 million, wiping out all the jobs created in the private sector over the last decade.
Total unemployment dropped to 14.8 million (9.7%) after rising to 15.7 million (10.1%) in October 2009 from 7.7 million (5.0%) in December 2007 and from 11.6 million (7.6%) in January 2009.
The numbers still indicate that companies are approaching their maximum “leanness” and sustain perceptions that the economy is approaching employment turnaround.
Unemployment is still the highest since April 1983. In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.
The current rate is 9.7% and the number unemployed is at 14.8 million.
This is the third consecutive month of unemployment holding steady.
The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) fell to 8.3 million in January from 9.2 million in December. Previous month part time figures were November (9.2 million), October (9.3 million), September (9.2 million), August (9.1 million), July (8.8 million) and June (9.0 million).
These persons had their hours cut back to 34 hours or less or were unable to find full-time jobs. Since the start of the recession, the number of such workers has increased by 3.7 million, and has remained relatively constant since March 2009.
January 2010 is the first month this number has declined (-849,000).
Long-term unemployed persons (jobless for 27 weeks and more) have tripled since the start of the recession to 6.3 million since December 2007, adding 3.6 million to that number since January 2009. Four in ten (41.2%) unemployed persons are in this category.
The average length of unemployment has risen to more than 30 weeks, the longest on record since 1948.
Discouraged workers (persons no longer looking for work) rose to 1.1 million in January, up from 929,000 in December, 861,000 in November and 734,000 a year ago.
This is the first month that number has exceeded 1 million.
Ed.Note: The number unemployed (and the unemployment rate) includes only those who looked for work in the last 4 weeks, and changes as the Civilian labor force population varies.
The number unemployed contrasted with the changes in payroll employment is accounted for by workers no longer looking for work and therefore dropping out of the Civilian labor force.
As consumer and business confidence improves, more workers will start to look for jobs again, returning to the workforce in anticipation of better employment conditions, which drives the unemployment rate higher. On the other side, workers drop from the work force for a number of reasons including giving up looking for work.
Industry sectors and historical data
Construction lost 75,000 jobs in January, perhaps due to inclement weather and low temperatures. Previous month changes were December (-32,000), November (-15,000), October (-67,000), September (-71,000), August (-64,000), July (-80,000), June (-91,000), and May (-59,000), with a total of 1.9 million since December 2007.
The monthly average construction job layoff figures have been improving steadily, over the last 9 months of January through November (-40,667), October through August (-67,333) and July through May (-76,667).
Manufacturing gained 11,000 jobs in January. Previous month changes were December (-23,000), November (-25,000), October (-57,000), September (-48,000), August (-57,000), July (-43,000), June (-129,000), and May (-152,000) with a widespread job loss total of 2.1 million since December 2007, mostly in the durable goods industry.
The monthly average manufacturing job layoff figures have been improving steadily over the last 9 months of January through November (-12,333), October through August (-54,000) and July through May (-108,000).
Retail trade gained 42,000 jobs in January. Previous month changes were December (-18,000), November (+9,000), October (-63,000), September (-43,000), August (-15,000), July (-53,500), June (-24,400), and May (-22,000).
The monthly average retail job figures have been improving steadily over the last 9 months of January through November (+11,000), October through August (-40,333) and July through May (-33,300).
Professional Business Services gained 44,000 jobs in January. Previous month changes were December (+20,000), November (+109,000), October (+11,000), September (-22,000), August (-34,000), July (-48,000), June (-132,000), and May (-51,000).
The monthly average retail job figures have been improving steadily over the last 9 months of January through November (+57,667), October through August (-15,000) and July through May (-77,000).
Education and Health Services gained 16,000 jobs in January. Previous month changes were December (+26,000), November (+31,000), October (+35,000), September (+26,000), August (+35,000), July (+21,000), June (+28,000), and May (+38,000).
The monthly average education and health services job growth figures have been steady over the last 9 months of January through November (+24,333), October through August (+32,000) and July through May (+29,000).
In a nonstop record of job growth, the health care industry has added 322,000 jobs in 2009.
Government employment (federal, state and local) lost 8,000 jobs in January. Previous month changes were December (-27,000), November (-11,000), October (+38,000), September (-39,000), August (+4,000), July (-47,000), June (-52,000), and May (-13,000).
The monthly average government employment (federal, state and local) job figures have been steady over the last 9 months of January through November (-10,000), October through August (+1,000) and July through May (-37,333).
The federal government added 33,000 jobs in January including 9,000 temporary jobs for the 2010 Census and 14,000 jobs for the USPS, offsetting the 19,000 jobs the USPS downsized in December. Except for education, state (-13,000) and local governments (-12,000) trended down.
Temporary help services added 52,000 jobs in January, adding to the 58,500 jobs in December, a net gain of 247,000 jobs since September 2009.
Unemployment spreads stayed relatively the same with the highest among teenagers (26.4%), followed down by African-Americans, then Hispanics. The lowest unemployment started with Adult women (7.9%) followed up by Asians (8.4%), Whites then Adult men (10.0%).
The good news from this data is that the job losses are lessening. It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign.
Average weekly hours and overtime
These figures closely correlate with overall output and when workweek hours increase give clues when firms will start hiring.
The average manufacturing workweek remained unchanged at 39.9 hours with overtime at 2.8 hours.
The average manufacturing hourly earnings remained steady at $23.19 for January. Over the past 12 months average hourly earnings have risen 1.8%.
The total Civilian labor force remained constant at 153.1 million (down 661,000 from November). There are a million fewer workers in the work force than in January 2009 (154.1 million). These are generally workers who have given up looking for work.
The Civilian labor force usually grows as a recession winds down and optimism about finding work grows. But as long as Americans remain anxious about their jobs, consumer spending is not expected to grow enough to power an economic rebound.
The employment population ratio (the proportion of the country’s working-age population that is employed), at 58.4 percent, has declined by 4.3 percent since the recession began in December 2007.
Comparing now with the final month of the last major downturn in November 1982, the total Civilian labor force then stood at 111.1 million. In that month, there were 11.9 million people unemployed accounting for 10.8% of the available work force (average for the year was 10.6 million unemployed with the rate at 9.7%).
Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 153.1 million:
| Rate%_ | Unemployed | 2009 | Rate%_ | Unemployed | 2009-2010 | |||
| 10.1(r) | 15.7 million | October | _ | _ | _ | |||
| 10.0 | 15.4 million | November | 10.0 | 15.3 million | December ‘09 | |||
| 9.8 | 15.1 million | September | 9.7 | 14.8 million | <=we are here – Jan ‘10 | |||
| 9.7 | 14.9 million | August | ||||||
| 9.5 | 14.7 million | June | ||||||
| 9.4 | 14.46 million | May,July | ||||||
| 8.9 | 13.7 million | April | ||||||
| 8.6(r) | 13.2 million | March | ||||||
| 8.2(r) | 12.5 million | February | ||||||
| 7.7(r) | 11.7million | January | ||||||
| 7.0 | 10.7million | |||||||
| 6.5 | 10.0 million | |||||||
| 6.0 | 9.2 million | |||||||
| 5.5 | 8.5 million | <= target | ||||||
| 5.0 | 7.7 million | |||||||
| 4.5 | 6.9 million |
(r)=revised
*To restore employment to the 5.5% level of 2008, about 6.4 million people will have to regain their job or start new jobs. It is a tall mountain to climb.
*Ed.Note: Government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level. With the current Civilian labor force, that means that on a permanent basis there will be roughly 12.2 million people unemployed — more than 5.8 million more than at the “normal” level today.
Data collection:
The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey. This translates into about 110,000 individuals. All the counties and county-equivalent cities are grouped into 2,025 geographic sampling units. 824 of these units are selected to accurately represent the entire population of the United States. For a detailed explanation, see the BLS Handbook of Methods.
Each month, one-fourth of the interviewed households are rotated out. They rejoin the sample after eight months, are interviewed for another four months, and then are rotated out forever.
Each month, 2,200 highly trained Census Bureau employees conduct interviews in the sample households for information on labor force activities (job holding and job seeking) or non-labor force status of household members.
This sampling method results in a 90+ percent probability that the results will be within 290,000 of the 153 million people in the Civilian labor force. A monthly total census would be cost-prohibitive.
Questions are specifically formulated so that neither the interviewer nor the persons interviewed decide their labor force classification. This prevents the sample from being distorted by respondents providing answers based on their opinion or what a “right” answer should be.
The basic concepts of employment are:
| 1. | People with jobs are employed |
| 2. | People who are jobless, looking for jobs and available for work are unemployed. |
| 3. | The sum of people employed or unemployed constitute the Civilian labor force. |
| 4. | People who are neither employed nor unemployed are not in the Civilian labor force. |
| 5. | People who are either institutionalized in a facility (correctional, residential nursing or mental health) or on active duty with the Armed Forces are not counted. |
The unemployment rates are extrapolated from the survey results.
The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force. They are counted separately.
Their number has nearly doubled in the previous 12 months.
Stimulus (Recovery Act):
The president credits his $787 billion stimulus package of tax cuts and increased government spending with improving employment. He hopes to create about 3.5 million jobs. Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 8+%.
The Fed’s record-low interest rates, along with other moves to drive down loan rates and stimulate borrowing, have supported the economic rebound.
The White House Council of Economic Advisers released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010.
A senior White House official stated that the Obama administration’s fiscal stimulus plan will meet their previous estimates to save 3.5 million U.S. jobs by the end of 2010, but the unemployment rate at that time may be higher due to further deterioration in the economy. White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.
The president is now drafting a proposal to try to stimulate more hiring. Obama plans to send Congress a list of ideas, including new tax breaks for small businesses that hire, some new spending on roads, bridges and other construction and grants to state and local governments to avoid layoffs. Congress is likely to take up a job-creation package in the New Year.
As of January 26, 2010, of the
$329,766,478,709 announced,
$332,170,100,278 (100.7%) has been made available
$175,973,271,008 (53.4%) has been paid out to the states
Recession histories:
With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%.
The approach that time, however, was to fix the economy at the expense of the worker.
Some compare the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next four to five months (past performance is no guarantee of the future).
Economist William Polley made a chart that includes every recession since World War II. It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.
William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak.
Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently. Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.
The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:
Recession peaks 1974-2009
| Millions | Pct | Labor | Growth | Recession Period | |||
| Unemployed | Force | Length | |||||
| Start | July 1974 | 5.5 | 91.9 | ||||
| Peak | May 1975 | 8.4 | 9.0 | 10 mos | |||
| Return | May 1979 | 5.6 | 104.9 | 14.1% | 4 yrs 10 mos | ||
| Start | May 1979 | 5.6 | 104.9 | ||||
| Peak | Nov 1982 | 11.9 | 10.8 | 3 yrs 6 mos | |||
| Return | Apr 1988 | 5.4 | 121.6 | 15.9% | 8 yrs 11 mos | ||
| Start | Nov 1990 | 6.2 | 125.8 | ||||
| Peak | May 1992 | 9.7 | 7.6 | 18 mos | |||
| Return | Dec 1994 | 5.5 | 131.0 | 4.1% | 4 yrs 1 mo | ||
| Start | Nov 2001 | 5.5 | 143.7 | ||||
| Peak | June 2003 | 9.2 | 6.3 | 19 mos | |||
| Return | Feb 2004 | 5.6 | 146.5 | 1.9% | 2 yrs 3 mos | ||
| Start | Dec 2007 | 5.0 | 153.7 | ||||
| Peak | Oct 2009 | 15.7 | 10.0 | 22 mos | |||
| Return | 9.7 | 153.1 | -0.4% | 2 yrs 1 mo so far | |||
Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later. By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.
The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.
The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:
Unemployment rates:
It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”We live in hope (again, past performance is no guarantee of the future).
