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Saturday, January 07, 2012

Employment Situation Improves

I wrote the other day about my frustration with trying to make sense of the unemployment number released by the United States government each month.  Months with more jobless claims but a reduced rate of unemployment?  (Remember that numerator/denominator thing I wrote about?)  I came to the conclusion that it was wiser to focus on employment to get an accurate picture of how the economy is doing in this country rather than that deceptive unemployment rate.

More on that in a second.

First the good news.  From the Wall Street Journal:
More Jobs Again

It has been two and a half years since the recession ended, but the economy finally had a modestly bullish jobs report on Friday. The private economy created 212,000 net new jobs in December, taking the unemployment rate down a tick to 8.5%. That is hardly a figure to celebrate, but it beats the 9% rate that prevailed as recently as September.

Most private occupational areas gained jobs, even manufacturing (23,000) and construction (17,000), and the ranks of the long-term unemployed fell to a still too high 42.5% from 43.1% in November. Government lost jobs (12,000) overall, but that is good news because it means state and local governments are continuing to adjust their employee levels to actual revenues. No more artificially inflated payrolls due to deficit-financed federal "stimulus." [link]
Good news.

But that unemployment rate number that Obama yesterday told you was a sign that all is better?  It still doesn't tell you what you need to know.  So the Wall Street Journal does:
One continuing sign of employment weakness is the still-low labor force participation rate, which remained unchanged at 64%. That is down from 64.3% a year ago. Another 50,000 workers left the labor force in December, suggesting that many Americans have simply stopped looking for work. As the nearby chart shows, in 2007 when jobs were plentiful the labor force participation rate was 66%. The two percentage point decline is the equivalent of about three million fewer Americans working or looking for work.
To illustrate that disturbing trend:

To put it another way: If the unemployment rate drops because hundreds of thousands of jobs are being created each month, that’s obviously good news. But if the jobless rate falls because the government estimates that lots of people have become discouraged and dropped out of the labor force, then that’s not good news.

Here's my theory: Until the world came crashing down in 2008, many - if not most - households had two wage earners. In many of those many today, that is no longer the case. Either the husband or wife - whichever was able to hang on to his or her job - is providing for the family now, as opposed to the situation in years prior. And in a lot of those instances we find Daddy doing day care duties while Mommy brings home the bacon. Also, in the case of older Americans - male and female - well, they've just quit looking, knowing their prospects for finding employment, having to compete with younger candidates for jobs, are slim to none.

So we have good news. America's employers are employing again. But there's still that trend ...

- - -

Something you might find interesting.  You remember the dire predictions that Obama made back in 2009 if his near-trillion dollar "stimulus" didn't pass Congress?  Well, guess what.  The numbers released yesterday reflect the very statistics that Obama warned us would be the case - even though he got - and spent - his budget-busting near-trillion dollar "stimulus."

See "Unemployment Rate on Par With Obama’s Projection of Jobless Rate Without Stimulus Spending."

And wonder if our gifted president even has a clue.

Chart courtesy of the United States Bureau of Labor Statistics.