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Friday, March 08, 2013 11:14 AM


Jobs +236,000, Unemployment Rate 7.7%, Part-Time Employment +446,000


Initial Reaction

The establishment survey reports of +236,000 job.

For the first time in four months the establishment survey was accompanied by a healthy +170,000 surge in the household survey.

Let's dig deeper.

The economy added a whopping 446,000 part-time jobs. Thus, the economy shed 276,000 full-time jobs. Those part-time jobs were supposedly "on purpose".

It's fair to point out the volatile nature of part-time statistics, but the 446,000 increase is unusually large.

One possible explanation for the surge in voluntary part-time employment is retirees needing additional income. However, that theory is not consistent with a labor force shedding 130,000 workers.

Part-time employment for "economic reasons" rose by 15,000.

Those not in the labor force rose by 296,000 and the labor force itself fell by 130,000. Those factors, coupled with the massive rise in part-time employment explains the .2 drop in the unemployment rate.

Long-term unemployment (27 weeks or more) rose by 89,000, the first increase since October.

This is a decent report, but it is nowhere near as good as it looks at first glance, with obvious questions about part-time employment and duration of unemployment.

February BLS Jobs Report at a Glance

  • Payrolls +236,000 - Establishment Survey
  • US Employment +170,000 - Household Survey
  • US Unemployment -300,000 - Household Survey
  • Involuntary Part-Time Work +15,000 - Household Survey 
  • Voluntary Part-Time Work +446,000 - Household Survey
  • Baseline Unemployment Rate -.02 at 77% - Household Survey
  • U-6 unemployment -.01 to 14.3% - Household Survey
  • The Civilian Labor Force -130,000 - Household Survey
  • Not in Labor Force  +296,000 - Household Survey
  • Participation Rate -.01 to 63.5 - Household Survey


Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.

Quick Notes About the Unemployment Rate

  • In the last year, those "not" in the labor force rose by 1,693,000
  • Over the course of the last year, the number of people employed rose by 1,473,000
  • In the last year the number of unemployed fell from 12,806,000 to 12,032,000 (a drop of 774,000)
  • Long-Term unemployment (27 weeks and over) rose to 4,797,000 from last month's total of was 4,708,000, a net rise of 89,000
  • Percentage of long-term unemployment hopped up to 40.2% from last month's 38.1%. Once someone loses a job it is still very difficult to find another.


February 2013 Jobs Report

Please consider the Bureau of Labor Statistics (BLS) February 2013 Employment Report.

Total nonfarm payroll employment increased by 236,000 in February, and the unemployment rate edged down to 7.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, construction, and health care.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted



Average weekly hours rose .1 to at 34.5 hours. A year ago average hours were 34.6 hours. Average hourly earnings rose .05 to $23.82.

Real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly. For 2013, one needs to factor in the increase in payroll taxes for Social Security.

For further discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?

BLS Birth-Death Model Black Box

The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.

The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total.

The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.

Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.

Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.

Birth Death Model Adjustments For 2012



Birth Death Model Adjustments For 2013



Birth-Death Notes

Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.

In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small.

For a discussion of how little birth-death numbers affect actual monthly reporting, please see BLS Birth/Death Model Yet Again.

Household Survey Data



Decline in Labor Force Factors

  1. Discouraged workers stop looking for jobs
  2. People retire because they cannot find jobs
  3. People go back to school hoping it will improve their chances of getting a job
  4. People stay in school longer because they cannot find a job

Were it not for people dropping out of the labor force, the unemployment rate would be well over 10%.

Part Time Status (in Thousands)



click on chart for sharper image

There are 7,988,000 workers who are working part-time but want full-time work. This is a volatile series.

Table 15 BLS Alternate Measures of Unemployment



click on chart for sharper image

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 7.7%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 14.3%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Duration of Unemployment



Long-term unemployment remains in a disaster zone with 38% of the unemployed in the 27 weeks or longer category.

Grossly Distorted Statistics

Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.

Digging under the surface, much of the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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