Rightfully yours

U.S. Bureau of Labor statistics:

Employment Situation: Economic News release

The Civilian Non-institutional population represents all citizens over age 16 eligible to be employed. This measures the flow of workers entering the job market and those retiring.

–Current: 239.31 million; up 167,000 from last month; up 1.81 million in the last 12 months (from 237.50 million).

Employment is a moving target. In a healthy economy, around 60% of those newly eligible look for employment, so about 125,000 jobs a month or 1.5 million new jobs per year must be filled just to keep the unemployment rate stable.

The Civilian labor force represents employed and unemployed workers actively looking for work.

–Current: 153.69 million; up 272,000 from last month; down 544,000 in the last 12 months (from 154.24 million).

–Employed workers: 139.78 million; up 105,000 from last month; up 426,000 in the last 12 months (139.35 million).

–Unemployed workers: 13.91 million; up 167,000 from last month; down 970,000 in the last 12 months (14.88 million).

–Civilian population not in the labor force: 85.62 million; up 105,000 from last month; up 2.36 million in the last 12 months (83.26 million).

At the start of the recession, 63.3% of the population was employed. Currently it is 58.4%.

–Unemployment rate (Civilian labor force unemployed workers) returned to 9.1 (9.053) percent (due to a combination of the large rise in both the Civilian labor force and workers returning to the job market with the relatively small number of jobs added. This is a normal occurrence in a recovery where more workers re-enter the labor force but have not yet found jobs).

Nonfarm payroll employment represents the Civilian labor force in selected industries (does not count farm workers).

–Current: 131.04 million; up 54,000 jobs from last month; up 870,000 in the last 12 months (130.17), increased by 1.797 million since the February 2010 low.

Private sector employment represents nonfarm payroll employment (not counting government workers).

–Current: 108.92 million; up 83,000 jobs from last month; up 1.72 million in the last 12 months (107.19).

Government employment represents federal, state and local government employment.

–Current: 22.13 million; down 29,000 jobs from last month; down 853,000 in the last 12 months (22.98).

Bottom Line:

Nonfarm payroll gained on 54,000 jobs in May while the Civilian labor force gained 272,000 new workers. That translates to a bump up to 9.1 percent of the force unemployed (up from 9.0 percent last month). Part of the influx of new workers are the 105,000 workers who rejoined the labor force. This indicates a return to confidence that there are jobs for those who diligently look for them.

The Civilian non institutional population has grown by 1.8 million in the last 12 months, and although the labor force has decreased by 544,000 over that same time period, there are 426,000 more workers employed today. The bottom line is that there are 970,000 fewer unemployed than 12 months ago.

The arithmetic of the employment picture works as follows: Employed (139,779,000) plus Unemployed (13,914,000) plus those Not in the labor force (85,620,000) total to the Civilian labor force (those employed or looking for work). The unemployment rate is Unemployed divided by the Labor force number (9.053 percent).

We are at a plateau here rather than a stumbling point. 64.2 percent of the expanding population enters the work force. For May, the Civilian non-institutionalized population (non-military, not incarcerated or institutionalized) grew by 167,000, meaning 107,214 workers were looking for jobs. Add to that the 105,000 who returned to the work force and we have 212,214 workers looking for employment.

The math is easy this month. The Civilian work force grew by 167,000, and those unemployed grew by that exact number. The 105,000 workers returning to the work force apparently all found jobs, since the number employed grew by that exact number; but that still leaves 62,000 new workers still searching for work, bumping the unemployment rate up to 9.053 percent from 8.96 percent.

Here’s where the government job numbers get confusing. The unemployment rate is based on those unemployed in the Civilian labor force (153,693,000), but the number of jobs added (+54,000) refers only to nonfarm workers (131,043,000). ??

Moving on…

Federal Reserve Chairman Ben Bernanke warned that there has been a “loss of momentum” in the U.S. jobs market. Only 1.8 million jobs of the 9 million jobs lost during the recession have been recovered. An unstable jobs market suppresses spending by both consumers and businesses. Homes are not purchased, leading to slower employment improvement in the construction and furnishings industries as well as financially constrained state and local governments continuing to cut spending and employment.

The employment picture is changing. Whether we realize it or not, the jobs that will last a lifetime, or even a decade are gone. Employers are watching their bottom lines and cash flow with fiscal microscopes, and employment costs account for about two-thirds of a company’s expenses.

It seems to me we are moving toward an environment where employment will flow with business fortunes, and a job will last only until someone can do it better (or cheaper).

Consumers are also taking better care of their possessions, from cars to household items, lengthening their product life where possible. This means that from manufacturing to retail sales, orders will be fewer. with the disaster in Japan playing no small part in the supply of components.

Where will jobs for our expanding population come from? A good question with many possible answers. The expanding fields of information technology, medical, business support, sales and teaching are all domestic infrastructure jobs that only circulate wealth around the country.

In order to rebuild the nation’s wealth and tip the balance of trade back in our favor, new industries must be developed that can be dominated here. The most probable candidates are all technology-based which require employees with extensive education.

Consumer Confidence Survey

For this month, the Conference Board shows that the:

• Consumer Confidence Index^® (short-term outlook) decreased to 60.8 from last month’s 66.0 (1985=100).
• Present Situation Index (optimism or pessimism about current conditions such as unemployment) decreased to 39.3 from last month’s 40.2 rating.
• Expectations Index (optimism or pessimism about future conditions) decreased to 75.2 from last month’s level of 83.2.

Household Survey Data

Nonfarm payroll employment gained 54,000 jobs in May. Previous month changes were: April (+232,000); March (+194,000); February (+235,000); January (+68,000); December (+121,000); November (+93,000); October (+210,000); September (-24,000; Census workers -136,000; net -112,000); August (-57,000; Census workers -114,000; net +57,000); July (-66,000; Census workers -143,000; net +77,000); June (-175,000; Census workers -225,000; net +50,000); May (+433,000; Census workers +411,000; net +22,000).

Census workers peaked at 564,000 workers in May 2010.

The quarterly average nonfarm payroll job data has three-month averages at: March through May (+160,000); December through February (+141,333); September through November (+93,000).

Between January 2007 and December 2009, 6.9 million workers were displaced from jobs they had held for 3 years or more. By January 2010, 49 percent of them were reemployed, but not necessarily in the same industries they had worked before.

Average weekly hours and overtime

The average workweek for production and non-supervisory employees employees remained consistent at 33.6 hours; average hourly and weekly earnings increased slightly to $19.43 with weekly earnings at $652.85.

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

The number of persons working part time for economic reasons in non-agriculture industries (sometimes referred to as involuntary part-time workers) decreased by 52,000 to 8.55 million. These persons had their hours cut back to 34 hours or less (+145,000) or could only find part-time work (-7,000).

The number of persons not in the labor force but marginally attached to the labor force decreased by 260,000 to 2.21 million. 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. This number is down slightly from 2.22 million a year ago.

Among the marginally attached workers, the number of discouraged workers decreased by 167,000 in the current month to 822,000. These are persons no longer looking for work.

This number has decreased by 261,000 from a year earlier.

Long-term unemployed persons (jobless for 27 weeks and more) increased by 361,000 to 6.2 million this month. This is more than 4.7 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. 44.5% unemployed persons are in this category or more than 4% of the work force.

The average duration of unemployment has decreased to 39.7 weeks. A year ago it was 34.3 weeks. At the start of the recession the average length of unemployment was 16.6 weeks. Half of the unemployed regain employment in 22.0 weeks.

The long-term unemployed number is down by 510,000 workers since the May 2010 high of 6.7 million.

Unemployment spreads stayed relatively the same with the highest among teenagers (24.2%), followed down by African-Americans, then Hispanics. The lowest unemployment started with Asians (7.0%), followed up by Adult women (8.0%), Whites then Adult men (8.9%).

Establishment Survey Data

Construction gained 2,000 jobs in May. Previous month changes were April (+5,000); March (+5,000); February (+30,000); January (-32,000); December (-16,000); November (-2,000); October (+4,000); September (-11,000); August (+34,000) reflecting 10,000 workers on strike in July who returned to work; July (-2,000); June (-21,000); May (-29,000).

The quarterly average construction job data has three-month averages at: March through May (+4,000); December through February (-6,000); September through November (-3,000).

Currently, there are 5.529 million construction jobs, the same as a year ago (5.529 million). In December 2007, there were 7.5 million.

Manufacturing lost 5,000 jobs in May. Previous month changes were April (+24,000), March (+20,000); February (+33,000); January (+49,000); December (+14,000); November (+15,000); October (-4,000); September (-6,000); August (-26,000); July (+32,000); June (+13,000); May (+39,000).

The quarterly average manufacturing job data has three-month averages at: March through May (+13,000); December through February (+32,000); September through November (+1,667).

Currently, there are 11.7 million manufacturing jobs, an increase of 158,000 from a year ago (11.5 million). In December 2007, there were 13.726 million.

The Institute for Supply Management said manufacturing activity expanded for the 22^nd consecutive month led by new orders in apparel, leather products and transportation equipment, and the overall economy grew for the 24^th consecutive month, driven mainly by exports. The ISM manufacturing index (PMI) read 53.5, the first reading below 60 for 2011 and the past 12 months, due to slower growth in new orders and production. A reading above 50 indicates growth, and a PMI above 42 percent over a period of time indicates an expansion of the overall economy.

Of the 18 manufacturing industries, 14 are reporting growth led by Nonmetallic Mineral Products; Petroleum & Coal Products; Machinery; Transportation Equipment.

Retail trade lost 8,500 jobs in May. Previous month changes were April (+64,000); March (-5,600); February (-8,100); January (+27,500); December (+2,800); November(-15,600); October (+38,200); September (-3,900); August (+6,400); July (+11,100); June (-20,500); May (-5,800).

The quarterly average retail job data has three-month averages at: March through May (+16,767); December through February (+7,400); September through November (+6,233).

Currently, there are 14.53 million retail trade jobs, an increase of 106,700 from a year ago (14.42 million). In December 2007, there were 15.57 million.

Professional Business Services gained 44,000 jobs in May. Previous month changes were April (+50,000); March (+75,000); February (+44,000); January (+31,000); December (+54,000); November (+85,000); October (+40,000); September (+28,000); August (+38,000); July (-5,000); June (+33,000); May (+26,000).

Professional and business services consist of legal, accounting, management consulting, administrative and support services. In hard times, they are the first to be trimmed. In recovery, the jobs grow in these fields, as employers emerge from survival mode.

The quarterly professional business services job data has three-month averages at: March through May (+56,333); December through February (+43,000); September through November (+51,000).

Currently, there are 17.16 million professional business services jobs, an increase of 520,000 from a year ago (16.64 million). In December 2007, there were 18.05 million.

This is one of the largest job growth fields.

Temporary help services (a subset of Professional Business Services) lost 1,200 jobs in May. Previous month changes were April (-1,600); March (+30,000); February (+22,700); January (-11,400); December (+38,100); November (+26,800); October (+27,200); September (+27,300); August (+22,500); July (-6,700); June (+11,200); May (+30,400).

The quarterly temporary help services job data has three-month averages at: March through May (+9,067); December through February (+30,700); September through November (+27,100).

Currently, there are 2.24 million temporary help services jobs, an increase of 187,300 from a year ago (2.06 million). In December 2007, there were 2.56 million.

Temporary hiring is the first step to permanent hiring as employers see if revenues justify the extra help.

Educational Services gained 6,600 jobs in May. Previous month changes were April (+12,600); March (-2,500); February (+4,000); January (-100); December (+5,400); November (+6,800); October (+25,000); September (-7,900); August (+9,700); July (-1,600); June (+7,500); May (+5,300).

The quarterly average educational services job data has three-month averages at: March through May (+5,567); December through February (+3,100); September through November (+7,967).

Currently, there are 3.2 million educational services jobs, an increase of 84,100 from a year ago (3.135 million). In December 2007, there were 2.98 million.

Health care and Social Assistance gained 27,200 jobs in May. Previous month changes were April (+41,000); March (+36,000); February (+36,200); January (+12,900); December (+27,900); November (+30,900); October (+42,100); September (+34,200); August (+31,300); July (+27,800); June (+22,600); May (+18,800).

The quarterly average health care and social assistance job data has three-month averages at: March through May (+34,733); December through February (+25,667); September through November (+35,733).

This is one of the largest job growth fields.

Currently, there are 16.73 million health care and social assistance jobs, an increase of 360,600 from a year ago (16.37 million). In December 2007, there were 15.58 million.

Government employment (federal, state, local, U.S. Postal Service) lost 29,000 jobs in May. Previous month changes were April (-19,000); March (-25,000); February (-30,000); January (-14,000); December (-18,000); November (-35,000); October (+17,000); September (-136,000); August (-144,000); July (-183,000); June (-236,000); May (+381,000).

The quarterly average government employment (federal, state, local, U.S. Postal Service) jobs have been dropping (except for the Census bubble) over the last nine months and has three-month averages at: March through May (-24,333); December through February (-20,667); September through November (-51,333).

Currently, there are 22.13 million jobs, a decrease of 853,000 jobs from a year ago (22.98 million). In December 2007, there were 22.38 million.

Federal government (except U.S. Postal Service): Currently, there are 2.22 million jobs, an decrease of 533,000 jobs from a year ago (2.75 million). In December 2007, there were 1.97 million.

U.S. Postal Service: Currently, there are 630,200 jobs, a decrease of 29,500 jobs from a year ago (659,700). In December 2007, there were 781,300.

State governments education: Currently, there are 2.40 million jobs, an increase of 33,700 from a year ago (2.37 million). In December 2007, there were 2.33 million.

State governments (excluding education): Currently, there are 2.71 million jobs, a decrease of 57,700 from a year ago (2.77 million). In December 2007, there were 2.81 million.

Local governments education: Currently, there are 7.90 million jobs, a decrease of 150,800 from a year ago (8.05 million). In December 2007, there were 8.05 million.

Local governments (excluding education): Currently, there are 6.26 million jobs, a decrease of 116,500 from a year ago (6.38 million). In December 2007, there were 6.43 million.

Employment explained

To restore employment to the 5.5% level, 5.46 million workers will have to regain their job or start new a job.

The government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level.

To get to the 8% level, 1.62 million workers need jobs. 12.295 million workers will still be unemployed under the new standard.

The Civilian labor force has receded this past year by 544,000, but normally grows at the rate of 1.5 million new workers per year. At 8%, 120,000 workers each year will be added to the unemployed, driving that number constantly higher.

Unemployment is a moving target that can only be battled with new industries.

Our recession history of unemployment:

Over the last 12 months, net 426,000 jobs were filled in the Civilian labor force, but if you are unemployed, the rate is 100%..

Where are the jobs?

It comes as no surprise that the occupations with the largest job growth 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 employment go hand in hand.

The following table shows that unemployment is consistently greater for those with less education. It also shows that workers over 55 (women more than men) are more likely to remain employed).

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 153.7 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 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 firms) 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 (signed into law by President George W. Bush on October 3, 2008) cost much less than expected. Originally expected to exceed $300 billion, the Congressional Budget Office (CBO), as of December 10, 2010 estimates the program will cost only $25 billion, freeing up more than $200 billion to pay for other parts of the jobs program, without increasing projected federal deficits.

Stimulus spending by state

As of May 27, 2011,
$481,803,484,735 has been awarded
$389,618,101,712 (80.86%) has been paid out to the states

Read: How the Stimulus Is Changing America

Recession histories:

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.

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

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 1974-2011:

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 (past performance is no guarantee of the future).

The next Economic Jobs report will be found at:
Economic Picture: June 2011 released July 8, 2011

The last Economic Jobs report will be found at:
Economic Picture: April 2011