September 03, 2004

Employment News: Not Good

144,000 increase in payroll employment in August, just enough to keep us from losing ground relative to the growing labor force. A nonfarm employment level of 131.47 million--but according to the forecast the Bushies released last February, it was projected to be 133.18 million by now.

I, at least, would very much like to know how George W. Bush answers the following question: "What has gone wrong with the economy to leave us with an employment level 1.7 million below what you projected last February that it would be by now?"

Posted by DeLong at September 3, 2004 05:43 AM | TrackBack
Comments


It's all Clinton's fault.

Posted by: RT at September 3, 2004 05:46 AM

Yes, that was meant facetiously.

Posted by: RT at September 3, 2004 05:48 AM

Your expectations that Bush policy would be based on anything even tangential to reality is way out of line.

The sum total of Bush economic policy is this: Remove taxes from investment incomes and shift the entire burden to wage-and-salary incomes.

What impact will this have on the economy? Neither Bush nor anyone in his cabinet cares. The economy is not important. What IS important is making sure that the Republican money machine keeps ringing--and that happpens most frequently and loudly when the contributors have lots more tax-free money to give.

Posted by: Derelict at September 3, 2004 05:49 AM

First line in this morning's "Ahead of the Tape" column in the WSJ: "The only reasonable prediction one can make on Friday's employment report is that it is unlikely to come anywhere near predictions."

Median prediction: 150,000
Actual: 144,000

Nelson from "The Simpsons": Ha-ha.

Posted by: BC at September 3, 2004 05:55 AM

You know exactly what he would say. Start rambling about 9/11 and corporate scandals and how it crippled our economy and than go into how he inherited a recession. Correct if I wrong, but was there every an actual 'recession' in formal terms. I remember some numbers where revised?

Posted by: gary at September 3, 2004 05:55 AM


Bush will run a victory lap, based on the inexplicable drop in the unemployment rate to 5.4.

Posted by: Jon H at September 3, 2004 05:58 AM

Wow -- 144,000 jobs. 132,000 of which were from the seasonal adjustment! That means a whopping 12,000 real jobs were added in August folks.

Posted by: Dave at September 3, 2004 06:08 AM

It's not inexplicable; I haven't seen a breakdown, but when you have weak jobs growth and yet unemployment drops, it's usually because of the 'discouraged workers.' I.e., a lot of people have given up and dropped out of the employment market.

Posted by: tavella at September 3, 2004 06:09 AM

Even with adjustment, we lost 10,000 jobs in the Information Sector (without adjustment, it was a loss of 23,000 jobs). How wonderful for our new information-based economy...

ftp://ftp.bls.gov/pub/suppl/empsit.tab1.txt

Posted by: Dave at September 3, 2004 06:13 AM

And why doesn't any member of the press ask the same question when they are out trumpeting 1.5m new jobs?

Posted by: Mike at September 3, 2004 06:17 AM

A few things.

1. Dave, don't they adjust for things like that?

2. It's not a horrendous number, but it's not a great number, either. It was better than last month's, though, so is it fair to say we might be on an upswing?

3. How will this play in the media? Those goons over at freerepublic.com are creaming themselves over this report.

Posted by: Brian at September 3, 2004 06:22 AM

A good portion of that drop in the unemployment rate was horrified Americans fleeing the country after Zell Miller's speech.

Posted by: praktike at September 3, 2004 06:24 AM

The Household Survey numbers (touted by Sec. Snow LAST month) did not look so good. The employment to population ratio actually fell. Yes, the unemployment rate fell as the reported labor force fell.

Posted by: pgl at September 3, 2004 06:25 AM

What is the population growth? Is it 700,000 legal p/a + 700,000 illegal p/a - about 114,000 per month?

This article from a bush supporter puts it much higher (http://www.bushcountry.org/news/columnists/tamara-wilhite/c_082804_wilhite_numbers.htm)

Posted by: Anthony at September 3, 2004 06:28 AM

Could someone take a look at this link:
http://www.troyrecord.com/site/news.cfm?newsid=12654007&BRD=1170&PAG=740&dept_id=226959&rfi=6

And explain it to me? The author is claiming a 143k job increase for last month. However, she did not seasonally adjust the number, but rather compared it to the year ago number (I think). Is this a valid approach?

Posted by: mario at September 3, 2004 06:38 AM

I thought everyone knew that "2 million new jobs" prediction was pulled out of some speechwriter's nether orifice.

After nearly 4 years of economic happytalk that in no way reflects reality, why does anyone take seriously anything the Bush Admin says about the economy?

Posted by: Ciel at September 3, 2004 06:38 AM

Brian,

Yes, they do adjust for seasonality. In an economy with zero population growth and zero economic growth, in an average year, one would expect the economy to lose 132,000 jobs from July to August.

This year, we gained 12,000 real jobs from July to August. That's due to both population growth and economic growth. You add back the 132,000 adjustment and "voila" you get the 144,000 number.

144,000 is pathetic. Average from 1/97 through 12/2000 (including the dismal summer of 2000) was just over 238,000 new, adjusted jobs per month.

Last month's number was 73,000 after adjustment. That's beyond pathetic.

That's like going from scoring 30% on an exam to 60%. Woohoo! Doubled my score! But it's still an F!

Posted by: Dave at September 3, 2004 06:39 AM

I'd like to know where my coworker and I show up in the stats. We've exhausted our unemployment for the year. So are we still "unemployed"? Which side of that 5.4% unemployment rate are we on? My suspicion as that we're now part of the 94.6% - but that doesn't mean we're "employed."

What exactly does that 5.4% measure?

Posted by: John Lyon at September 3, 2004 06:41 AM

The GOP convention in a nutshell...
9-11
9-11
9-11
9-11
John Kerry sucks
John Kerry is a flip-flopper
Terrorism ....Bush keynote
Amen

The war party peddles in fear, because that's all they have left to sell.

After 4 yrs Bush is still all HAT no CATTLE...

with his abysmal record on the US economy.
with his abysmal record on the jobs
with his abysmal record on healthcare
with his abysmal record on the environment
etc.etc. etc.

Net Net: George W. Bush is a "FAILURE"

Kerry Hits Back

NEWARK, Ohio - In a scathing attack, Democratic presidential candidate John Kerry accused Republicans of hiding President Bush's "record of failure" behind insults and promised a new direction for the country under a Kerry-Edwards administration.

They have attacked my patriotism and my fitness to serve as commander in chief," Kerry said. "I'm not going to have my commitment to defend this country questioned by those who refused to serve when they could have and by those who have misled the nation into Iraq,

"Misleading our nation into war in Iraq makes you unfit to lead this country," Kerry added. "Doing nothing while this nation loses millions of jobs makes you unfit to lead this country. Letting 45 million Americans go without health care makes you unfit to lead this country. Letting the Saudi Royal Family control our energy costs makes you unfit to lead this country," Kerry told several thousand supporters.

Kerry faulted the president and Republicans for not talking about "real issues" — creating jobs, improving the economy, expanding access to health care and reducing gasoline prices.

"We've had insults, we've had anger from Republicans. And I'll tell you why," Kerry said. "Because they can't come to you and talk to you about having created jobs since they've lost them. They can't come to you and talk to you about creating health care since 5 million Americans have lost it.

"They can't talk about their record because it is a record of failure. And so all they do is attack."

Edwards, introducing Kerry, said voters deserve a president who will fight for them. Of Kerry, he said: "He is a fighter and you're about to see it."

Now the debate will turn more to REAL issues like the economy, jobs, healthcare, environment and Kerry/Edwards are going to pummel the daylights out of Bush/Cheney.

George W. Bush: "FAILURE" is a simple, very clear, and true message that most American voters will "Get"

Kerry/Edwards are going to win !

Posted by: standa at September 3, 2004 06:41 AM

Juan Cole nails it !

The CEO Test for Bush
http://www.juancole.com/2004_09_01_juancole_archive.html#109418733847016818
Friday, September 03, 2004

Posted by: standa at September 3, 2004 06:41 AM

Back to school unemployment drop. Unemployment is much higher among teens than the rest of the population.

Posted by: bakho at September 3, 2004 06:45 AM

I should also mention that the seasonally-unadjusted employment gains in August (12,000) included a +120,000 adjustment factor for the "birth/death" of new firms. So, in raw, unadjusted jobs, we had a decrease of 108,000 jobs.

http://www.bls.gov/ces/cesbdhst.htm

Posted by: Dave at September 3, 2004 06:56 AM

BC said: "First line in this morning's "Ahead of the Tape" column in the WSJ: "The only reasonable prediction one can make on Friday's employment report is that it is unlikely to come anywhere near predictions.
Median prediction: 150,000
Actual: 144,000
Nelson from "The Simpsons": Ha-ha."

To be fair to the "Ahead of the Tape" writer, this is the first time the forecasts have been remotely close to the reported number in many, many months.

tavella said: "I haven't seen a breakdown, but when you have weak jobs growth and yet unemployment drops, it's usually because of the 'discouraged workers.' I.e., a lot of people have given up and dropped out of the employment market."

That's exactly what happened. The labor force fell by 152,000. Of course, that's part of the household survey, which generates the unemployment rate, so I give it little credence.

That puts the White House in a bit of a bind. They like to point to the household survey when the payroll survey is weak. This household survey comes up with a drop in unemployment, but that's based on thousands dropping out of the work force.

Still, I think it'll work to their favor -- few voters will look past the headline that the "unemployment rate is the lowest in three years."

Posted by: Capt. Willard at September 3, 2004 06:56 AM

Sorry, wrong link above (that was historical birth/death adjustment). My number is still correct.

Current version is here: http://www.bls.gov/web/cesbd.htm

Posted by: Dave at September 3, 2004 06:58 AM

Dave writes:
>
> I should also mention that the seasonally-unadjusted
> employment gains in August (12,000) included a +120,000
> adjustment factor for the "birth/death" of new firms. So, in
> raw, unadjusted jobs, we had a decrease of 108,000 jobs.

But why should *anybody* care about the raw unadjusted numbers (unless you are making an econometric argument about how they were derived?) The whole point of making the adjustment is that otherwise you can be (too) easily misled by seasonal and other predictable trends in the data. Maybe it's time for Brad to re-post his graph of "not seasonally adjusted" employment numbers, to refresh people's memories?

Posted by: Jonathan W. King at September 3, 2004 07:05 AM

Potential GDP growth is about 4% -- 3%
productivity and 1% employment growth.

This means that growth has to exceed 4% for the
unemployment rate to drop. Despite noise and
all kinds of spin last year the economy grew over 4% and the unemployment rate fell. Now the economy is growing at or modestly below 4%
so employment is barely growing and the changes in the unemployment rate are not significant.

The bottom line is that growth is not strong enough to generate any improvement in the backlog of the unemployeed. the situation is not getting any better but it is not really getting any worse. Now both sides will try to spin the results, but it is nothing for Bush to be proud of.

Posted by: spencer at September 3, 2004 07:16 AM

Jonathan W. King writes:

>But why should *anybody* care about the raw >unadjusted numbers (unless you are making an >econometric argument about how they were derived?)

Well, econometrically speaking -- yes, I have a problem with how the numbers are derived. We have no idea about the predictive validity of the ARIMA model they use for the birth/death adjustments. And BLS refuses to publish how the b/d adjustment affects the seasonally-adjusted employment numbers.

And, otherwise, why would one care about real *unadjusted jobs*? Because those are *real people* (who vote). Hey! Don't despair about losing your job in August -- in a typical year, 132,000 people lose their job, so you'll be all right!

Posted by: Dave at September 3, 2004 07:24 AM

The good news is that weekly earnings are up either 3.5% (NSA) or 2.9% (SA) from a year ago. Thus paychecks, on an inflation adjusted basis, are just about flat or up a bit from a year ago in August. That has not been true of every recent month, so hurray!

As far as the birth/death "plug" goes, there is also good news. After swinging pretty strongly through the first half of the year, the plug will now settle down to the 30k-40k range for several months (based on last year's example), so we don't have to worry about whether it is messing up the published jobs tally for awhile.

John Lyon,

You are, as you probably suspected, unemployed. As long as you report yourself (should BLS bother to ask you) actively seeking employment and without a job, BLS thinks you are unemployed. The data series in which your status changes when benefits run out is the weekly count of continuing unemployment beneficiaries. You are no longer in the beneficiary count.

Mario,

The Trim-Tabs argument is not exactly silly, but it is awfully egotistical. They are essentially saying that the Herculean efforts of BLS statisticians to create reasonable seasonal adjustment factors are inferior to Trim-Tabs own estimates. If you came up with a method to correct for seasonal variation that came to just the opposite conclusion from that reached by Trim-Tabs, you'd have just as much reason to crow about how wrong T-T is as T-T has to crow about BLS. I've watched Trim-Tabs for some time. They count stuff, and they analyze stuff. In general, they count better than they analyze.

Posted by: kharris at September 3, 2004 07:26 AM

What matters is what job figures for swing states are. How many were lost in Ohio? Anybody know?

Posted by: Bob H at September 3, 2004 07:39 AM

Not exactly sure on how many were lost in Ohio, but Ohio was 3rd in mass layoffs in July.

http://www.bizjournals.com/columbus/stories/2004/08/30/daily12.html

Posted by: BrianE at September 3, 2004 07:54 AM

Dave,

I understand the concern that the birth/death plug is driving swings in the seasonally adjusted net job change series, but I'm not sure how BLS could describe the impact of the plug on the payroll count other than to say "first we plug it in, then we seasonally adjust the whole thing." Their approach is to make the plug part of the NSA job count, then adjust. If I were to guess, I'd say the problem is that the new version of the plug has been around too briefly to do adequate seasonal adjustment, so some of the monthly swings in the plug are bleeding over into the seasonally adjusted count. If so, then the problem will solve itself in another year or so.

Posted by: kharris at September 3, 2004 08:01 AM

Hi kharris,


The BLS could report the contribution of the b/d model to seasonally-adjusted jobs if it wanted to. In their FAQ section, we have:

-----
Q: Can BLS provide an estimate of the contribution of the birth/death adjustment to the seasonally adjusted monthly payroll change? Can BLS independently seasonally adjust the net birth/death component?

A: There is not an estimate of the seasonally adjusted contribution of the birth/death model. [...]

Source: http://www.bls.gov/ces/cesbdqa.htm
-----

"There *is not* an estimate..." They are simply choosing not to publish the estimate.

It seems to me that it would be very easy to simulate the effect of the b/d model on the adjusted figures. Just set the coefficients in b/d ARIMA model s.t. net jobs due to b/d at time t = net jobs due to b/d at time t-1 and re-run the whole seasonal adjustment model.

On a related note, I am not sure exactly how to interpret the following. Are they really saying they don't prospectively validate the model?

--------
Q: Is birth/death ever benchmarked to actual data, or is just the overall estimate benchmarked?

A: No, the birth/death factors are not independently benchmarked. Although more recent data are available, birth/death factors are not benchmarked or recalculated in the benchmarking of the CES estimates. Only the estimates are benchmarked.

Source: http://www.bls.gov/ces/cesbdqa.htm

----------

Posted by: Dave at September 3, 2004 08:23 AM

very astute question from Bob which reminded me of stump promises for the steel industry. Just in time for the faltering auto industry, no?
kharris and Dave, the CES site tables the birth/death numbers since inception and the 144k number is plausible given the 03 pattern, no? Because the actual calculation is not provided does leave it open to the charge that Kurt R levels against it: a guess open to political manipulation. Disclosure would correct this problem, but perhaps unearth another with that Jan 03 entry?
Lastly, did I read that correctly 408K discouraged workers left the market?

Posted by: calmo at September 3, 2004 08:31 AM

Looking to the wider scale, job creation is anemic for recovery from a recession. There is a serious employment problem and little reason to believe there will soon be a surge in job creation. Wages are more or less keeping pace with inflation, while benefits lag. Revenue flows to corporations are adding to profits and management salaries, far more than to workers wages. Since the economy is growing moderately however, the Fed is likely to continue to increase the Federal Funds rate. I am not pleased.

Posted by: anne at September 3, 2004 08:36 AM

Dave -- beyond kharris's points on the birth/death adjustment, you shouldn't lose sight of the point, made pretty clearly on the CES birth/death model page you link, that firm births and deaths are a source of nonsampling error in the CES. (I.e., the unavoidable lag in updating the sample frame for firm births and deaths implies that CES tends to oversample firms with job losses, imparting a downward bias to the unadjusted payroll employment change.) Obviously, this doesn't affect the more fundamental point that meeting the lowered expectations of the forecasting corps constitutes a poor performance.

With the net birth/death adjustment a trivial fraction of employment, but large relative to the employment change, I think the BLS can be faulted for not providing some indication of the sampling-type and/or prediction error variances of the adjustments. (Or if such information exists, for not linking it conspicuously from the b/d FAQ page.)

In any event, from kharris's comments it would appear that the b/d adjustment will figure less prominently in the September figures, which will arguably be the more politically potent -- or, at least, more likely to fall within the attention spans of the campaigns and media.

Posted by: Tom Bozzo at September 3, 2004 08:39 AM

me either anne.

Did 408.000 really leave the workforce? I would like to know who they are. Two years later and I am still looking. No I don't receive anything, just sending out resumes. those numbers are bogus and I would say that true unemployment, if everyone were counted, would be on par with Europe.

Posted by: me at September 3, 2004 08:43 AM

Calmo,

I'm not particularly worried about political manipulation. I think BLS is very professional. I am worried about whether the numbers are valid, statistically -- and relevant to the political economy.

From BLS:

"The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend. BLS will continue researching alternative model-based techniques for the net birth/death component; it is likely to remain as the most problematic part of the estimation process." [http://www.bls.gov/web/cesbd.htm]

Of course, one must be fair and state that *any* econometric modeling has the same fundamental problem. What bothers me is that they appear to never actually engage in predictive validation; rather they simply add in new data and re-estimate the model (quarterly, I think).

Dave

Posted by: Dave at September 3, 2004 08:46 AM

"Lastly, did I read that correctly 408K discouraged workers left the market?"

Labor force participation is not climbing. So, the decline is the unemployment rate was not a healthy sign.

Posted by: anne at September 3, 2004 08:48 AM

Tom,

You are correct -- ignoring net employment due to net firm birth would be a non-sampling error. However, "correcting" that error with a model for which we have no measure of predictive validity does not guarantee that we closer approach the truth!

Dave

Posted by: Dave at September 3, 2004 08:53 AM

"But why should *anybody* care about the raw unadjusted number"

Because unadjusted numbers have a lot of very interesting data in them.

" but when you have weak jobs growth and yet unemployment drops, it's usually because of the 'discouraged workers.' I.e., a lot of people have given up and dropped out of the employment market."

Looking at where the employment participation rate is going down, it is mainly due to young people not even entering the job force. Basically people are hanging out in college or working freelance jobs and living with their parents longer.

Posted by: Stirling Newberry at September 3, 2004 08:55 AM

"But why should *anybody* care about the raw unadjusted number"

Because unadjusted numbers have a lot of very interesting data in them.

" but when you have weak jobs growth and yet unemployment drops, it's usually because of the 'discouraged workers.' I.e., a lot of people have given up and dropped out of the employment market."

Looking at where the employment participation rate is going down, it is mainly due to young people not even entering the job force. Basically people are hanging out in college or working freelance jobs and living with their parents longer.

Posted by: Stirling Newberry at September 3, 2004 08:58 AM

Republican Terrorism in the New Millenium

As long as we're talking about essentially negative-growth in employment (compared to that required to keep pace with growing US population and to replace retiring workers) and negative-growth in investment and estate tax income (thanks to Bush's generous tax incentives), and negative-growth in wages (compared to that required to offset huge increases in commodity costs and the declining value of US$ compared to basket of world currencies), and negative-growth in Federal budget (thanks to Bush military over-spending and tax cuts to the rich) then let's talk about fundamental Republican economic and educational terrorism.

While Bush can make the claim that he got stuck with the Y2K US economic meltdown, (the large part of that meltdown came from the Republican owner's securities graft and equities corruption that began first during Reagan's S&L bailout, and ultimately created the pump-and-dump scam) one thing Bush clearly *cannot* claim is, that his fiscal policies since then have not been a deliberate act of economic terrorism against a majority of the American people.

Bush economic terrorism touting an "ownership society", where a tiny minority of Fed, owners, investors, bankers, realty mortgagers, credit companies, and all the other economic ills that America is heir to, make and control policies that are designed to impoverish all Americans.

This is the most fundamental terrorist attack in American history, transforming a country "of the people, by the people and for the people", into a country "of the owners, by the owners and for the owners," happening right before our eyes.

While slightly less than 1/3rd of Americans have no credit cards, and a similar small percentage of people pay their's off every month, almost a majority of Americans owe money on their credit cards, carried over month to month. In other words, *almost* a majority of Americans live in perpetual wage-slavery, from hand to mouth.

But why educational terrorism? In the ownership society that Bush evisions, workers won't have careers in the traditional sense, with regular salaries, benefits and pensions. Oh no! They'll work in "multiple careers", which are really no careers at all. They will be part-timers, on-callers, two-jobbers, W-1099'ers. They will "pay-in" for benefits, which are paid out of pre-tax income, soon leaving the majority of Americans without any medical, dental or mental health coverage. They will "pay-in" for retraining, desparately searching for any skills to make an income. Retrained by other displaced workers, reading lessons one step ahead of the class. And those pensions? Forged abahd it, baby! Corporate productivity and demands of investors requires employers to steal those promised pensions back.

All this is aided and abetted by Republicanism.

But again, why educational terrorism? Didn't Bush promise to "leave no child behind"? That empty promise, perhaps the most ruthless plank in the Republican strategy, shows most clearly the double-speak these terrorists use against US.

"Leave no child behind" is simply raising the bar, a bar already too high for a system that isn't training our kids for their futures. 30% of our state's high-school kids drop out. 50% of our minority kids drop out! Incredible! 30% of our state's children will not get their GED!

The Republican suggestion? Weed them out early. Test them out, like cattle. Divert educational funds that could be used for art, music, sports, after-school programs, languages, *anything* to capture our kids' interest, and instead spend those monies on testing, eliminating, sifting out the "useable" from the "useless" goyum.

Could anything be more crass or terroristic than that? Isn't it enough that the 5% elite who own America have 95% of the population serving them cradle-to-grave? Must the owners also deprive a *third* of our kids of their chance for a GED, and a chance for a "career" above a living wage?

This is nothing less than turning back the clock to a past of rich plantations and poor slaves. Taking a strong people, an enlightened people, and by exploitation, reducing them to illiteracy and manual labor. Reducing economic opportunity, and educational opportunity, and wage incomes, for *all* Americans, and in doing so, sealing the demise of our paid-in (but loaned out and ultimately never to be repaid) Social Security.

Our SS Trust Fund. *Our* pensions!

This is terrorism at it's most fundamental, and Republican cabals are at the very center of it. The best way to keep a majority of the American people cowed and afraid, is to deny the majority the freedom to learn, and to grow, to achieve a life even one single notch above wage-slavery, knowing that the moment they stop work, there is no retirement pension, only starvation and death.

"Be all that you can be." (without that GED)

Imagine waking up every day to the owner's whip. Imagine fifty years of your manual labor direct-deposited to the owners, then evicted to a tent city of empty cupboards, shivering, toothless, with no social security income to live on, and nobody who will look at you, their heads down, hands in their pockets, hurrying on past.

Hurrying *towards* the past, should be the Republican's slogan for the New Millenium.

Hurrying towards Haiti.

Hurrying towards The Have's and the Have-More's, Bush's Compassionate Conservative Base.

Terrorism with the smirk of a plantation owner.

Posted by: Harry Possue at September 3, 2004 08:59 AM

Dave -- true enough, an upward adjustment to a downward-biased statistic does not yield an unbiased statistic. Tom

Posted by: Tom Bozzo at September 3, 2004 09:02 AM

Economic macho man Steven Roach kicks Schwarzenegger's girlie little ass:

http://www.morganstanley.com/GEFdata/digests/20040903-fri.html#anchor0

"Lest I get accused of taking all this too seriously, I will proudly stand up for the vast legions of economic girlie-men in America today. I have long maintained that the current recovery in the US economy has been largely a false one -- unduly influenced by the “steroids” of excess fiscal and monetary stimulus. Steroids have also played an unfortunate role in providing illegal stimulus to some athletes (and bodybuilders) in recent years. The problem comes in trying to break the habit without suffering serious side effects. For the economy, it’s all about sustainability. Without the organic fuel of job creation and wage income generation, diminished policy stimulus could result in an economic relapse. For athletes, the post-steroid syndrome can be equally painful. And they call us girlie-men!"

Posted by: David W. at September 3, 2004 09:03 AM

http://www.epinet.org/content.cfm/webfeatures_econindicators_jobspict_20040903

Notably, much of the recent progress against unemployment, including last month's, has been due the slow growth—or in August's case, the decline—of the labor force, itself a reflection of the recent slowing in job growth. In fact, the share of the adult population in the labor force fell slightly last month from 66.2% to 66.0%, and remains 1.1 percentage points below its level at the end of the last expansion in March 2001.

The labor force contracted by 152,000 in August, and there was also a significant jump of 214,000 in the number of those not in the labor force who say they currently want a job. The average annual growth rate of the labor force this year has been 0.5%, about half that of last year (1.1%).

An even larger deceleration occurred among so-called prime-age workers , those adults age 25-54 who are most likely to be in the job market, dropping from 1.6% last year to 0.5% this year. Since March 2001, their participation rate in the labor force is down 1.3 percentage points, a highly unusual occurrence this far along in a business cycle. In fact, averaging over all past recessions/recoveries, the participation rate of prime-age workers has been up 1.2 percentage points, almost the same amount it has fallen in the current case.

Posted by: anne at September 3, 2004 09:49 AM

I'm looking at Table A-5 of the report, "Employed persons by class of worker and part-time status". I can't get the SA numbers to agree with Table A, however looking at the trends by class from July to August, this is what I see:

Wage & Salary Workers: Declined
Government Worker: Rose
Private Industries: Declined
Self Employed Workers: Rose

My Conclusion: If you want a job you better apply to Uncle Sam or suck it up and make your own job.

Posted by: section321 at September 3, 2004 09:50 AM

http://www.epinet.org/content.cfm/webfeatures_econindicators_jobspict_20040903

The problem of long-term unemployment remains severe. The average duration of jobless spells rose from 18.6 weeks in July to 19 weeks in August, and the share of jobseekers who have been looking for work for over half a year increased from 20.4% to 20.7%. August marks the 23rd month that more than one-fifth of the unemployed have suffered such long-term joblessness. Previously, the longest such spell was 18 months, from December 1982 to May 1984. Note that the unemployment rate averaged 9.2% over that period, compared to 5.8% over the past 23 months, thus providing another example of how the current unemployment rate paints an overly rosy picture of the extent of labor market slack.

Posted by: anne at September 3, 2004 09:53 AM

Dave,

Yup, I know about the statement in the FAQ. My point is that, beneath all the (lack of) explanation, the point BLS seems to be trying to make is that this is an unseasonally adjusted number that is pushed through a seasonal adjustment program (sector by sector) after it is married to actually jobs counted by establishments. Doing a seasonal adjustment for the plug doesn't tell you much. Monthly deviations from the average would tell you how one statistical estimate (the plug) is varying against another statistical estimate (the seasonal adjustment factor) rather than anything about the economy. You still wouldn't know whether the lift or drag imparted by the plug was appropriate – whether it actually captured net job creation. Neither does BLS, on a month-to-month basis, but they don't want to offer figures that don't have any obvious interpretation.

The fact is, the BLS doesn't measure as much of the labor market as they would like, and are left guessing about the rest. The old way of guessing had such obvious flaws, that they are trying a new one. It's still a guess.

Posted by: kharris at September 3, 2004 10:27 AM

kharris,

Maybe we can agree on one thing -- the month-to-month estimates are perilous.

The magnitude of the b/d adjustment (as it applies to the seasonally-adjusted data) is unknown, but based on the deasonally unadjusted factor (+120,000 this month) could be quite large. The b/d adjustment methodology is a "black box" -- and seems to be explanatory rather than predictive in nature.

Where we disagree appears to be on whether unadjusted data is of any importance. I think seasonally-adjusted data is really only interesting to people trying to forecast where the economy is headed (i.e., academics and professional economists). The unadjusted numbers (correctly corrected for net b/d) matter to those individuals who actually are gaining or losing those jobs.

Go tell a worker that just lost her job: "It's ok -- after seasonally adjusting, you're not really unemployed."

Posted by: Dave at September 3, 2004 11:20 AM

Tom Bozzo: "[T]he September figures [. . .] will arguably be the more politically potent -- or, at least, more likely to fall within the attention spans of the campaigns and media."

I doubt that. I don't think any of these figures are particularly politically potent. The vast majority of voters pay them no attention. They get their estimate of how the economy is doing from local anecdotal evidence: a neighbour's employer laid off a bunch of folks or most of the new graduates got jobs or . . .. Just as they don't look at the CPI (unless their pension's indexed to it), rather gaining their own estimate of inflation from their own spending. Then, of course, they may or may not base their vote on their economic perceptions.

What the official numbers tell us (from a political point of view, not an econometric) is how likely it is that bad or good anecdotal evidence is going to be available to how many voters.

They also feed the spin cycle for a day or two.

Posted by: jam at September 3, 2004 12:56 PM

There is a thematic question here about what is different in this economy . Fact: Internet sales were up in the first half by 23% approaching $60 B annualized. Think about the number of retail sales outlets this represents, construction jobs, infrastructure, sales clerks,and on. Think aobut the other jobs we are outsourcing to ourselves: ATM's, e-banking, e-loan applications, self-checkout, etc.
These are material job losses that make us more efficient but impact lots of entry level jobs. No public policy is going to reverse this. Retrain and deal with it. Bush has the right approach.

Posted by: D.J. at September 3, 2004 01:53 PM

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Weakest job recovery since the 1930s

Since the recession began 41 months ago in March 2001, 1.0 million jobs have disappeared from the U.S. economy, representing a 0.8% contraction. To put this performance in historical perspective, the Bureau of Labor Statistics began collecting monthly jobs data in 1939 (at the end of the Great Depression). In every previous episode of recession and job decline since 1939, the number of jobs had fully recovered to above the pre-recession peak within at least 31 months of the start of the recession (the average, excluding the 1991 recovery, has been 20 months to full recovery).

Private-sector jobs have fared worse than public-sector jobs. Jobs in the private sector have dropped by 1.7 million since March 2001, representing a 1.5% contraction. However, having no job losses, or gains, is a very low standard by which to judge a recovery — with history as a guide, one would have hoped that the economy would have recovered the jobs lost months ago. If job growth had been at the pace of other post-war business cycles (a 5.5% growth by the 41st month), then over 7 million new jobs would have been created by now.

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Posted by: anne at September 3, 2004 02:18 PM

Views differ on shape of earth, err, economy (from MSNBC):

"The latest government jobs report lent itself to competing interpretations."

Previous presidents “have faced wars and recessions, but not one of them has failed to create a single job,” Kerry said. He said the most recent statistics made it inevitable that Bush’s term would end with a net loss of employment.

Not surprisingly, Bush offered a different interpretation.

“Overall, we’ve added about 1.7 million jobs since August 2003. The unemployment rate is down to 5.4 percent,” he said. “That’s nearly a full point below the rate last summer and below the average of the 1970s and 1980s and 1990s.”

http://www.msnbc.msn.com/id/5906715/

Posted by: Kosh at September 3, 2004 02:36 PM

DJ, who's this "we" who's outsourced these jobs? I don't recall outsourcing to myself the job of making sure that, the local telecommunications company, mortgagor, health insurance provider, auto purchase financer would do their jobs correctly. But for the past 3 years, that's exactly what I've had to do. I've also noticed that generally prices/costs do not decrease (unless temporarily) along with the decrease in service and efficiency. So it's just another corporate cost-shifting mechanism, not some kind of byproduct of an alleged technological evolution.

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Kasriel/Bangalore posted today on the employment stats putting them in an entirely different perspective (OK maybe just for me). They make a compelling case for being nearly 10 Million jobs behind.
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Note that the September jobs report is set to appear on the day scheduled for the second presidential debate (if the debates actually take place).

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