Rightfully yours

Report from the U.S. Department of Labor statistics:

Employment:

Nonfarm payroll employment rose by 290,000 yet the Unemployment rate also rose by 0.2% to 9.9% in April. 

The Unemployment rate had held at 9.7% for January through March after dropping from the high of 10.1% in October 2009.   

How can there be more workers employed yet the Unemployment rate goes up? 

The reason is 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 fluctuates. 

As consumer and business confidence improves, more workers 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.

The number of unemployed in March was 15.0 million.  The number of unemployed persons in April was 15.3 million, increasing the unemployment rate 9.9 percent.

Here’s the numbers:  The Civilian labor force increased by 805,000 in April (it has grown by 1.656 million since the start of 2010).  550,000 obtained jobs, 255,000 did not.  Unemployment still dropped by 635,000 in April to 15.265 million, giving 9.86 percent unemployment. 

In addition, 1.6 million college graduates are expected to join the Civilian labor force next month, with last year’s graduates still scrambling to land jobs.

See this report’s section on Civilian Labor Force.

Nonfarm payroll employment increased by 290,000 in April after a big increase in March (+230,000 [revised]) and holding nearly level in February (+39,000 [revised]) and January (+14,000).  This followed a big drop in December (-109,000), and a boost to prepare for the holiday season in November (+64,000).  Previous month changes were October (-224,000), September (-225,000), and August (-211,000).  

The quarterly average nonfarm payroll job layoff figures have been improving steadily over the last nine months with three-month averages at: February through April 2010 (+186,333), November 2009 through January 2010 (-27,000), and August through October 2009 (-220,000). 

Payroll employment decreased by 4.5 million jobs in 2009, wiping out all the jobs created in the private sector over the last decade. 

The current rate is 9.9% and the number unemployed is at 15.3 million. 

Total unemployment peaked at 15.7 million (10.1%) in October 2009 rising from 7.7 million (5.0%) in December 2007 and from 11.6 million (7.6%) in January 2009. 

In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable. 

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was 9.2 million in April.  These persons had their hours cut back to 34 hours or less or were unable to find full-time jobs.  Previous month part time figures have held relatively steady since March 2009 at 9 million.

About 2.4 million workers are considered marginally attached to the labor force.  These are workers who wanted and were available for work, and had looked for work sometime in the last 12 months.  They had not looked for work in the last 4 weeks and so were not considered part of the labor force. 

Among the marginally attached workers, discouraged workers (persons no longer looking for work) rose to 1.2 million in April equaling the peak 1.2 million in February 2010, and up by 457,000 from a year ago.      

Long-term unemployed persons (jobless for 27 weeks and more) stand at 6.7 million.  This is more than five times the number at the start of the recession in December 2007 (1.3 million).   In 2009 alone, 3.5 million were added to that number.  Four in ten (45.9%) unemployed persons are in this category. 

The average length of unemployment has risen to 33 weeks in April.  At the start of the recession the average length of unemployment was 16.5 weeks.

Industry sectors and historical data

Construction gained 14,000 jobs in April. Previous month changes were March (+26,000 [revised]), February (-64,000), January (-77,000), December (-32,000), November (-15,000), October (-67,000), September (-71,000) and August (-64,000).

The quarterly average construction job figures have been improving over the last nine months with three-month averages at: February through April (-8,000), November 2009 through January 2010 (-41,333) and August through October 2009 (-67,333). 

Currently, there are 5.625 million construction jobs. In December 2007, there were 7.491 million (down 1.866 million).  In December 2009 there were 5.696 million (down 71,000). 

Manufacturing gained 44,000 jobs in April.  Previous month changes were March (+17,000), February (+1,000), January (+20,000), December (-23,000), November (-25,000), October (-57,000), September (-48,000) and August (-57,000).   

The quarterly average manufacturing job figures have been improving steadily over the last nine months with three-month averages at: February through April (+20,667), November 2009 through January 2010 (-9,333) and August through October 2009 (-54,000). 

Currently, there are 11.635 million manufacturing jobs. In December 2007, there were 13.726 million (down 1.866 million).  In December 2009 there were 11.534 million (up 101,000). 

Retail trade gained 12,000 jobs in April.  Previous month changes were March (+15,000), February (+8,000), January (+42,000), December (-18,000), November (+9,000), October (-63,000), September (-43,000) and August (-15,000). 

The quarterly average retail job figures have been improving steadily over the last nine months with three-month averages at: February through April (+11,667), November 2009 through January 2010 (+11,000) and August through October 2009 (-40,333). 

Currently, there are 14.444 million retail trade jobs. In December 2007, there were 15.566 million (down 1.122 million).  In December 2009 there were 14.360 million (up 84,000). 

Professional Business Services gained 80,000 jobs in April.  Previous month changes were March (+11,000), February (+51,000), January (+30,000), December (+20,000), November (+109,000), October (+11,000), September (-22,000) and August (-34,000). 

The quarterly professional business services job figures have been improving over the last nine months with three-month averages at: February through April (+44,000), November 2009 through January 2010 (+53,000) and August through October 2009 (-15,000). 

Currently, there are 16.660 million professional business services jobs. In December 2007, there were 18.051 million (down 1.391 million).  In December 2009 there were 16.488 million (up 172,000).  This is one of the largest job growth fields.

Temporary help services added 26,000 jobs in April, and 330,000 jobs since September 2009. 

Currently, there are 2.055 million temporary help services jobs.  In December 2007, there were 2.557 million (down 502,000).  In December 2009 there were 1.191 million (up 864,000).   

Education and Health Services gained 35,000 in April.  Previous month changes were March (+45,000), February (+32,000), January (+16,000), December (+26,000), November (+31,000), October (+35,000), September (+26,000) and August (+35,000).   

The quarterly average education and health services job growth figures have been improving steadily over the last nine months with three-month averages at: February through April (+37,333), November 2009 through January 2010 (+24,333) and August through October 2009 (+32,000). 

Currently, there are 19.489 million education and health services jobs. In December 2007, there were 18.559 million (up 930,000).  In December 2009 there were 19.350 million (up 139,000).  This is one of the largest job growth fields.

Government employment (federal, state and local) gained 59,000 jobs in April.  While state and local governments trimmed their employment by 6,000 jobs, the federal government added 69,100 jobs, while trimming 4,000 jobs from the US Post Office. 

Of the jobs added by the federal government, 66,000 were temporary jobs for the U.S. Census, accumulating with the 48,000 added in March.  Over the next two months, another 600,000 to 700,000 census jobs will be added, and last through mid-July. 

Previous month changes were March (+39,000), February (-18,000), January (+7,000), December (-27,000), November (-11,000), October (+38,000), September (-39,000) and August (+4,000).   

The quarterly average government employment (federal, state and local) job figures have been irregular over the last nine months with three-month averages at: February through April (+26,667), November 2009 through January 2010 (-10,333) and August through October 2009 (+1,000). 

Federal government (except U.S. post office): Currently, there are 2.320 million jobs. In December 2007, there were 1.974 million (up 346,000).  In December 2009 there were 2.160 million (up 160,000). 

U.S. Post Office: Currently, there are 658,900 jobs.  In December 2007, there were 781,300  (down 122,400).  In December 2009 there were 663,700 (down 4,800). 

State governments (except education): Currently, there are 2.789 million jobs. In December 2007, there were 2.813 million (up 194,000).  In December 2009 there were 22.481 million (up 90,000). 

State governments education: Currently, there are 2.392 million jobs. In December 2007, there were 2.327 million (up 65,000).  In December 2009 there were 2.383 million (up 9,000). 

Local governments (except education): Currently, there are 6.416 million jobs. In December 2007, there were 6.429 million (down 13,000).  In December 2009 there were 6.439 million (down 23,000). 

Local governments education: Currently, there are 8.005 million jobs. In December 2007, there were 8.053 million (down 48,000).  In December 2009 there were 8.040 million (down 35,000). 

All government (federal, state, local, U.S. post office): Currently, there are 22.571 million jobs. In December 2007, there were 22.377 million (up 194,000).  In December 2009 there were 22.481 million (up 90,000). 

The good news from this data is that overall the job gains are increasing. 

Unemployment spreads stayed relatively the same with the highest among teenagers (25.4%), followed down by African-Americans, then Hispanics.  The lowest unemployment started with Asians (6.8%) followed up by Adult women (8.2%), Whites then Adult men (10.1%). 

Average weekly hours and overtime

The average workweek for all employees remained consistent at 34.1 hours. 

The average hourly and weekly earnings for production and non-supervisory employees in April held at $18.96 with weekly earnings at $633.26. 

These figures closely correlate with overall output and when workweek hours increase give clues when firms will start hiring. 

Civilian labor force

The total Civilian labor force rose sharply to 154.7 million from the 153.1 million at the start of 2010.  This indicates a mood elevation for workers re-entering the work force who had given up looking for work and now have hope that there are jobs for them. 

The Civilian labor force usually grows as a recession winds down and optimism about finding work grows.  This is the reason the unemployment rate rose along with added jobs.

The employment population (the number of the country’s working-age population that is employed) is at 139.5 million, up from the 137.8 million at the start of 2010.  This number will grow as jobs are created and the unemployment rate recedes.

Comparing the present 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%).  The average for 2009 was 9.3%, increasing from 7.7% in January to 10.1% in December.

Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 154.7 million:

(r)=revised

To restore employment to the 5.5% level of 2008, 6.8 million people will have to regain their job or start new a job.   

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 12.4 million people unemployed. 

Fastest growing occupations and Occupations with the largest job growth

It comes as no surprise that the fastest growing occupations in 2008 and projected to 2018 are in the fields of network systems and data communication and all aspects of the medical field, followed closely by financial examiners (accountants, auditors, etc.). 

The largest job growth fields also include office and administrative support jobs, sales and service jobs, teachers and jobs in construction and transportation.

Education and compensation go hand in hand.  

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 154.7 million workers 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: 

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. 

 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.  White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.

The president sent The Small Business Jobs and Wages Tax Cut to Congress on January 10, 2010 to try to stimulate more hiring.  It focused on small businesses, because as the president stated, “Over the past fifteen years, small businesses have created roughly 65 percent of all new jobs in America.”  The proposal included:

• Businesses will receive a $5,000 tax credit for every “net” new employee that they employ in 2010, capping at $500,000 per firm (and $250,000 for new firm) to ensure that the majority of the benefit goes to small businesses.
• Small businesses will be reimbursed for the Social Security payroll taxes they pay on real increases in their payrolls. Specifically, firms that increase wages, expand hours or hire new workers would get a credit against the added payroll taxes that result. This bonus would be based on Social Security payrolls, up to the individual taxable maximum of $106,800.
• Firms can claim the credit on a quarterly basis, returning money quickly to businesses, providing an early incentive to hire and increase payrolls.
• The Recovery Act tax incentives will be extended for depreciation of capital spending.
• There will be increased loan guarantees from the Small Business Administration (SBA), and an elimination of SBA fees. 
• There will be increased investments in roads, highways, bridges and other construction, and grants to state and local governments to create jobs and avoid layoffs

President Obama noted that this proposal would be worked into the various other proposals that have already advanced in Congress, such as The HIRING Act of 2010 and The Jobs for Main Street Bill of 2010. 

Because the Troubled Asset Relief Program (TARP) program is costing less with fewer losses than expected, as much as $200 billion has been freed up to pay for other parts of the jobs program, without increasing projected federal deficits. 

Stimulus spending by state 

As of May 5, 2010, of the
$335,693,715,067 announced,
$382,097,920,368 (113.8%) has been made available
$225,647,592,857 (67.2%) 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 1974-2010 

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).

The next Economic Jobs report will be found at:
Economic Picture: May 2010

The last Economic Jobs report will be found at:
Economic Picture: March 2010