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Thursday, December 15, 2011

Alternate Unemployment Rate Declines to 17.7% in November

Molly's Alternate Unemployment Rate Falls to 17.7% in November 2011 from 18.2% in October 2011. 

The decrease is due primarily to:

  1. Another 4.2% decrease in the number of people working part-time who want full-time work.  According to the Bureau of Labor Statistics, there are 378,000 FEWER involuntary part-time workers (people working part-time who want full-time work) in November as compared to October 2011.  This seasonally-adjusted number was decreasing in the early months of the year; it then rose dramatically for two months, but now has decreased for two months.  It is still unclear if this is a trend or an aberration.  We'll have to wait another couple of months to make this determination.
  2. An increase of 278,000 in the number of people who reported themselves as employed.  
  3. After accounting for people returning to work (the 278,000 additionally employed), a drop in the number of people who are actively looking for work.  315,000 people stopped actively looking for work, though there was an increase of 192,000 in the number of people who "want a job" but haven't actively looked for work recently.  That leaves about 123,000 people who have simply stopped looking and stopped wanting a job.  (I don't believe we can't count people as unemployed unless they profess to "want a job".)       

Molly's seasonally-adjusted alternate unemployment rate is 17.7% for November 2011. It is down a half of a percent or five-tenths (.5%) of a percent from the 18.2% of October 2011.  

28,416,000, over 28 million people, are unemployed and want to work OR underemployed (working part-time and wanting full-time work) in November 2011. This is an decrease of 780,000 people from the 29,196,000 who were unemployed and/or  underemployed in October.

The details of Molly's alternate unemployment rate continue after the jump.

In seasonally-adjusted numbers, 17.7% of the American Alternate Labor Force (in November 2011) were either:
  • "Officially" unemployed,
  • Working part-time but wanting full-time work,
  • or "Wanting a job" but hadn't looked in the past four weeks for some reason such as being discouraged, convinced that there was no work for them, or due to family obligations.
(Unlike others who calculate alternate unemployment rates, I do not count people among the alternate unemployed unless they say that they "want to work" according to the BLS Current Population Survey. How can you count someone as unemployed if they say they don't want a job?)

Here's how the numbers for the Alternate Unemployment Rate break down for November 2011:
  • The number of those unemployed and actively looking for work:  13,303,000 (vs. 13,897,000 in October)
  • The number of those working part-time who want full-time work:  8,518,000 (vs. 8,896,000 in October)
  • The number of people who "want a job" but haven't looked within the last month: 6,595,000 (vs. 6,403,000 in October)
Therefore, the total number of unemployed or underemployed is 28,416,000 (a decrease compared to 29,196,000 unemployed or underemployed in October).

The Alternate Labor Force consists of the 153,883,000 people in the official BLS Civilian Labor Force plus the 6,595,000 people who "want a job" but haven't actively looked recently. That is a total of 160,478,000 people (compared to 160,601,000 in October.).  The Alternate Labor Force (those working plus those who "want a job") decreased by 123,000, or .7% (seven-tenths of a percent) in November compared to October.  Molly's Alternate Unemployment Rate is the Alternate Number of Un/underempoyed as a percentage of the Alternate Work Force.

Therefore, Molly's Alternate Unemployment Rate for November 2011 is 17.71% or 17.7%.  

Molly's Alternate Unemployment Rate for November went down primarily due to 1.)  A decrease in the number of people working part-time jobs who want full-time jobs.  That number, now 8,518,000, decreased about 380,000 since October, and it has decreased about 750,000 in total since September.
2.)  A decrease in the number of people who are actively seeking work.  That number, now 13,303,000, decreased about 600,000 since October.  About half of that decrease is attributable to people getting jobs, as the number of people reporting themselves working rose about 280,000 since October.

Therefore, in November, we have about 660,000 MORE people who are either working (and were not working before) or working full-time (who were working part-time before) than we did in October. 

The Part-time Work Force

Part-time workers (either voluntarily or involuntarily) as a percentage of the total employed is at 19.1% in November, a decrease from 19.5% in October.  (This number exceeded 20% at the height of the recession, while this number was around 16.6% at the peak of employment in late 2007 and at 16.1% in the Spring of 2000.)      

More and more of the people entering the work force seem to be working full-time as the number of part-time workers declines.   

For this month, November 2011, the underemployment rate is 6.1%.  This compares to 6.3% in October, 6.6% in September, and 6.3% in August. This rate is the number of people working part-time who want full-time work as a percentage of all employed. Some writers use the term "underemployment" to include those who are unemployed as well, but I use it only for those working part-time who want full-time work.

The "Want to Work" Population

There has been an increase of 3.0% in the number of people who "want to work" but have not actively looked for work in the past month.  In October, there were 6,403,000 in this group; now in November there are 6,595,000 in this group.  We simply do not know why people joined the "want to work" group in November vs. October.  Are these people who recently stopped working and anticipate re-joining the work force at some later date?  Or are these people entering the work force who have not yet started to work?  We simply can't tell from looking at Bureau of Labor Statistics numbers.

Why Did so Many People Leave the Workforce in November? 

Many people are saying that the "official" unemployment rate dropped .4% (four-tenths of a percent)  because so many (315,000) dropped out of the job market and stopped looking for work.    

Some are saying that the increase in the number of people leaving the labor force represents people that are very discouraged.  Though the BLS does not do a good job of determining why people have left the work force, there is no data to support the conclusion that ALL, or even a majority of these people, left the work force because they are extremely discouraged.  Though the number of officially "discouraged" workers went up after several months of trending downward, it went up by about 100,000, just a fraction of the 315,000 people who reported themselves as no longer in the work force.     

However, there was an increase  of 195,000 in the number of people who "want a job" but are not actively looking for work for some reason.  (Officially  discouraged workers are included in that 195,000.)  Therefore, a number equal to 62% of the people who have left the work force are still interested in a job, but 38% are not reporting themselves as interested in working, and we don't know why.  Some may have gone back to school; some may have retired.        

We can speculate:  As the number of people working went up, perhaps other family members who had been working part-time or working in less than ideal jobs decided to quit.  Though we don't yet have the number of "quits" from the BLS Job Openings, Layoffs, and Turnover Survey (JOLTS) for November, the number of people quitting (vs. people getting laid off) has increased between June and October.  The number of "other" separations, which includes people retiring, has also tended up.  In any event, we will have to watch future monthly reports to discern any trends regarding people leaving the labor force.

Who Do You Count and Where Do You Find These Numbers?

In greater detail, Molly's Alternate Unemployment Rate counts as the un/underemployed the following groups of people:

  1. All of those "officially" unemployed (actively looking) for work from the monthly BLS Employment Situation report.
  2. All of those "underemployed"; that is, those who are working part-time but who want and can't find full-time work according to Table A-8 of the same monthly Employment Situation Report.
  3. All of those who say that they "want a job" even if they have not actively looked for work in the past four weeks from the same monthly Employment Situation Report Table A-1. (This is a broader definition than the "discouraged workers" that BLS uses in calculating their U-6 number.)
The base workforce for Molly's Alternate Unemployment Rate includes the Civilian Labor Force (all of those employed, whether full or part time plus all of those actively looking for work) according to the BLS report plus the people who "want work" but have not actively looked in the past four weeks.

(As I wrote above, I do not include people who do not want a job; so if someone drops out of the labor force and tells the interviewers that they are no longer interested in obtaining a job (for whatever reason), they are not counted.)

Other comments on alternate unemployment and underemployment:

  • The "official" underemployment population consists of those people who are working part-time but want full-time work. These are the only "underemployed" people tracked and counted by the Bureau of Labor Statistics. However, people working at jobs below their skill level might are also considered "underemployed"; unfortunately, there are no national statistics on those workers.  
  • As usual, we need to remember that the alternate unemployment number DOES NOT include people working temporary but full-time jobs, people who are working micro-businesses that may not make much money, nor does it include people who have returned to work for wages much less than what they received in the past.

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