Report from the U.S. Department of Labor statistics:
Jobs:
- Nonfarm payroll employment continued to fall off this month (down 216,000) at a slower pace and hopefully will continue its slowdown (267,000 in July, 467,000 in June, 345,000 in May, 539,000 in April and 633,000 in March).
- It was the lowest level of job losses in a year.
- The average 3-month job layoff figure of 316,667 for June through August 2009 dropped 12 percent from the same average last month, when it was 359,667 (May through July), and nearly 40 percent that for the previous 3-month period (March through April) when it averaged 505,667.
- The slowdown indicates companies are approaching their maximum “leanness” and sustains perceptions that the economy gradually is swinging to recovery.
- Unemployment has increased steadily by 0.4 or 0.5 percent every month from December 2008 through May 2009. August is the first month the increase was 0.3 percent.
- The number of unemployed persons increased in August by 466,000 contrasted with a decrease in July of 267,000 compared with steady increases of 218,000 in June, 787,000 in May, 563,000 in April and 851,000 in March.
- Total unemployment has risen from 11.6 million (7.6%) in January to 12.5 million (8.1%) in February, to 13.2 million (8.5%) in March, 13.7 million (8.9%) in April, to 14.5 million in May (9.4%), 14.7 million in June (9.5%) and 14.46 million in July (9.4%).
- The current rate is 9.7% and the number unemployed is at 14.9 million.
- Unemployment is the highest since June 1983. In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.
- Since the start of the recession in December 2007, payroll employment has dropped by 7.4 million jobs.
- There is little doubt at this point; we will hit 10% unemployment in the near future.
- The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) rose to 9.1 million from the 8.8 million in July, compared to June at 9.0 million. These persons had their hours cut back or were unable to find full-time jobs. Since the start of the recession, the number of such workers has increased by 4.4 million, and has remained relatively constant since March 2009.
- The unemployment numbers look to be peaking.
- Long-term unemployed persons (jobless for 27 weeks and more) has tripled since the start of the recession to 5.0 million since December 2007, adding 584,0000 to that number in July. One in three unemployed persons are in this category.
- As consumer and business confidence improves, more workers will start looking for jobs again, returning to the workforce in anticipation of better employment conditions. This will drive the unemployment rate higher.
- Construction job losses led the month (down 65,000 for August, 76,000 for July, 79,000 for June, 59,000 for May, 110,000 for April and 161,000 for March).
- Manufacturing was a close second (down 63,000 for August, 52,000 for July compared with 136,000 for June, 156,000 for May, 149,000 for April and 161,000 for March) with widespread job losses in the component industries and transportation accounting for more than half the decline.
- Motor vehicles and associated parts suppliers lost 15,000 jobs in August, partly offsetting a 31,000 job increase in July.
- Service-providers cut 80,000 workers in August, while the goods-producers lost 136,000 jobs.
- Education and health services continued to add jobs, with payrolls increasing 52,000 in August after rising 21,000 in July. Government employment fell 18,000 after slipping 28,000 in July.
- Retail trade employment dropped by 9,600 contrasted with July’s 44,000, June’s 18,000 and April’s 47,000.
- Professional and business service jobs declined by 22,000 in August, less than the 38,000 in July, 118,000 in June, 51,000 in May, 122,0000 in April and 133,000 in March.
- Unemployment spreads stayed relatively the same with the highest among teenagers (25.5%), followed down by African-Americans, then Hispanics. The lowest unemployment started with Adult women (7.6%) and Asians (7.5%) followed up by Whites, then Adult men (10.1%).
- The good news from this data, is that the job losses seem to be lessening. It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign.
- The average workweek was unchanged at 33.1 hours in August. This figure closely correlates with overall output and gives clues on when firms will start hiring.
- Average hourly earnings (reflecting the recent increase in the legal minimum wage) rose to $18.65 in August, up from $18.59 in July, rising for a fourth straight month.
Workforce:
The total Civilian labor force stands at 154.5 million (up 73,000 from July). There are now 14.9 million people unemployed putting the rate at 9.7% of the available work force, last reached in June 1983.
The increase in Civilian labor force perhaps indicates the return of some jobless workers who had 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, at 59.2 percent, has declined by 3.5 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 154.5 million:
| Rate%_ | Unemployed | ||
| 9.7 | 14.9 million | <= we are here | |
| 9.4 | 14.46 million | ||
| 8.9 | 13.7 million | ||
| 8.5 | 13.2 million | ||
| 8.1 | 12.5 million | ||
| 7.6 | 11.7million | ||
| 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 |
.
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 12.5 million people unemployed — more than 4 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. 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’s $787 billion stimulus bill signed into law 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 7+%.
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.
Stimulus spending by state:
As of August 2009, of the
- $237,346,474 announced
- $182,752,973 (76%) has been made available
- $73,282,838 (30%) has been paid out to the states
http://www.recovery.gov/?q=content/funding-notification
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 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 five to six 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 1974-2008
| 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 | May 2008 | 5.5 | 154.7 | ||||
| Peak | May 2009 | 14.5 | 9.7 | 15 mos | |||
| Return | 154.5 | 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).
The next Economic Jobs report will be found at:
Economic Picture: September 2009
The last Economic Jobs report will be found at:
Economic Picture: July 2009
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