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Friday, April 05, 2013 9:36 AM

Jobs +88,000, Unemployment Rate 7.6%, Household Survey Employment Drops by 206,000

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Initial Reaction

The surge in employment fueled by part-time jobs and the Obamacare effect may finally be over. Although the establishment survey showed a gain of 88,000 jobs, the household survey, off which the unemployment rate is based, showed a loss of 206,000 jobs.

The unemployment rate edged lower by .1% because a whopping 496,000 people dropped out of the labor force.

Last month, voluntary part-time employment rose by a reported 446,000. It's plain to see that last month's numbers were a statistical aberration. This was a miserable jobs report from every angle.

March BLS Jobs Report at a Glance

  • Payrolls +88,000 - Establishment Survey
  • US Employment -206,000 - Household Survey
  • US Unemployment -290,000 - Household Survey
  • Involuntary Part-Time Work -230,000 - Household Survey;
  • Voluntary Part-Time Work -163,000 - Household Survey
  • Baseline Unemployment Rate -.1 - Household Survey
  • U-6 unemployment -.05 to 13.8% - Household Survey
  • The Civilian Labor Force -496,000 - Household Survey
  • Not in Labor Force +663,000 - Household Survey
  • Participation Rate -.02 to 63.3 - 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 2,069,000
  • Over the course of the last year, the number of people employed rose by 1,266,000
  • In the last year the number of unemployed fell from 12,686,000 to 11,742,000 (a drop of 944,000)
  • Long-Term unemployment (27 weeks and over) was 4,611,000 - a decline of 186,000 from last month's total of was 4,797,000
  • Percentage of long-term unemployment is 39.6%. It has been hovering near 40% for at least a year. Once someone loses a job it is still very difficult to find another.

March 2013 Jobs Report

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

Nonfarm payroll employment edged up in March (+88,000), and the unemployment rate was little changed at 7.6 percent, the U.S. Bureau of Labor Statistics reported today. Employment grew in professional and business services and in health care but declined in retail trade.

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

Unemployment Rate - Seasonally Adjusted

Month to Month Change by Type of Job

Average weekly hours rose .1 to 34.6 hours. A year ago average hours were 34.5 hours. Average hourly earnings rose $0.01 to $23.83.
In 2013, average hourly earnings are up $0.05.
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 7,638,000 workers who are working part-time but want full-time work. A year ago there were 7,664,000. There has been no improvement in a year. 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 7.6%. 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 13.8%. 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 39.6% 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

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