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Friday, June 1, 2012

What Was the Unemployment Rate When Obama Took Office? (May 2012 update)


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What was the unemployment rate when Bush left office and Obama was inaugurated? 7.8%

What was the unemployment rate at Obama's first full month in office (February 2009)?  8.3%

How high did it go?  10.0%

What is today's (May 2012's) unemployment rate?   
8.2%

What Caused the Rise in the Unemployment Rate When Obama Took Office?  Why has the Unemployment Rate Increased Since Obama Took Office?  (Continue reading below)

How many people were looking for work when Obama was inaugurated, how many were working?  And how many people are looking for work and how many are employed now?


Keep reading!








    The Unemployment Rate When Obama Took Office:
    • For the record, when Obama took office in January 2009, the "official" unemployment rate in seasonally adjusted numbers was 7.8%, with 12,049,000 people reporting themselves as unemployed and actively looking.  142,187,000 people were working in January 2009.*  (These numbers are adjusted slightly since original publication as the Bureau of Labor Statistics updates its numbers.  The original January 2009 unemployment rate reported by the BLS in February 2009 was 7.6%)  
    • In "raw" numbers not adjusted for seasonal variance, the unemployment rate was 8.5% with 13,009,000 people reporting themselves as unemployed and actively looking for work.  140,436,000 people were working in numbers not adjusted for seasonal variance.

    The Unemployment Rate at its Peak: 
    • At the "trough" (bottom in terms of jobs) of the recession in late 2009/early 2010, the "official" unemployment rate in seasonally adjusted numbers climbed to 10.0% in October 2009 with 15,421,000 people (out of a labor force of 153,822,000) reporting themselves as unemployed.   138,401,000 were working in October 2009; however, the lowest number of people working was reported in December 2009, when 137,792,000 people (in seasonally adjusted numbers) were working.    
    • In "raw" numbers not adjusted for seasonal variance, the unemployment rate reached a peak of 10.6% in January 2010 with 16,147,000 (out of a labor force of 152,957,000) reporting themselves as unemployed and actively looking for work.  Only 136,809,000 were working (in "raw" unadjusted numbers) in January 2010.

    The Unemployment Rate Now:
    • Now, in May 2012, the "official" unemployment rate in seasonally adjusted numbers is at 8.2%, with 12,720,000 (out of a labor force of 155,007,000) unemployed and actively looking for work.  142,287,000 people are working now.  (Last month 141,865,000 were working.  This is a increase of 422,000 people working in seasonally adjusted numbers.)  The unemployment rate  increased by .1% (one tenth of a percent) as unemployment increased by  220,000 and as 642,000 people entered the labor force in March.  (We have 1,120,000 more people in the labor force than we did in December 2011.)  (The unemployment rate has now decreased .7% since October.)
    • In unadjusted "raw" numbers the unemployment rate is now 7.9%, an increase of .2% since April, but a decline of .5% (one-half of a percent) since March.  In "raw" real numbers, 12,271,000 (out of a labor force of 154,998,000) are unemployed and actively looking for work.  142,727,000 are working now in "raw" numbers unadjusted for seasonal variation.  (This is an increase of 732,000 people working since last month.)

    To Summarize the Unemployment Rate Now Compared to When Obama Took Office:
    • Using seasonally adjusted numbers, the unemployment rate was 7.8% (and rising quickly) when Obama took office, and it is 8.2% today.   12,049,000 were officially unemployed back then, and 12,720,000 are unemployed today.  
    • Using nonseasonally adjusted numbers, the unemployment rate was already 8.5% when Obama took office, and it is 7.9% today.   13,009,000 were officially unemployed in "raw" numbers back then, and 12,271,000 are officially unemployed in "raw" numbers now. 


    What Was the Unemployment Rate When Bush Took Office in January 2001?
    • In seasonally adjusted numbers, the unemployment rate was 4.2% when Bush took office in January 2001.  6,023,000 people were officially unemployed at that time.    
    • In nonadjusted "raw" numbers, it was 4.7% when Bush took office in January 2001.  6,647,000 people were unemployed in "raw" numbers at that time.  
    • The adjusted unemployment rate went up to 6.3% by June 2003, and then it began to decrease.  That's an increase of 2.1% in 29 months.  That's a relative increase of 50% in 29 months before it turned down.  
    • It went down to 4.4% in late 2006 and again in May 2007, and then began to increase, reaching 7.8%, an increase of 3.3% by the time Bush left office. That's a relative increase of 75% in 20 months.      
    • The unemployment rate went from 7.8% when Obama took office and 8.3% during Obama's first full month in office to the peak of 10.0% discussed above before it turned down.  That's an increase of 2.2%.   That's a relative increase of 28% in 9 months before the unemployment rate turned down.
    • The following chart compares and contrasts the relative increase in the unemployment rate under Bush and Obama during their first 42 months (from inauguration until July of their respective fourth years in office) in three month blocks of time.  The rate under Obama jumped up further in his first year in office, but came down more quickly.  Under both presidents, the unemployment rate comes down and goes up in any 3-6 month period.   






    What Caused the Rise in the Unemployment Rate When Obama Took Office?  Why has the Unemployment Rate Increased Since Obama Took Office?

    These are questions I have received in my email, and I thought I would answer them here.

    As just mentioned, the unemployment rate was on its way up with a bullet starting in early 2008. The unemployment rate was 4.4% in mid 2007 before the full impact of the housing crash hit the labor market. Employment in construction hit a max in mid 2006 and had already started down by mid 2007, but most other employment sectors were not impacted. But by late 2007, the entire economy was starting to feel the impact of the housing crash. In a year and a half, from June 2007 until January 2009, the unemployment rate went from 4.4% to the 7.8% discussed above. 

    That's why we say that Obama inherited a rapidly-increasing unemployment rate. Why did it continue to rise after Obama took office? It takes a while for any government policy to take effect. Both TARP, the bank bailout signed by Bush in late 2008, and ARRA, the stimulus signed by Obama in February 2009, needed time to take effect, and that simply did not happen immediately. How long does it take to turn around the proverbial aircraft carrier vs. a speed boat? However, even though it took 9 months for the unemployment rate to max out (see below) and start decreasing, the rate of increase slowed down by June 2009.

    We can also think of the analogy of a fire: If a building is burning down, the fire department is called. It takes time for the fire department to put out the fire; it takes time for the fire to cool; it takes times for the debris to be hauled away. Only then can rebuilding start. And you certainly don't blame the fire department or the people who clean up the debris for the fire, do you? 

    The question, "What Caused the Rise in the Unemployment Rate After Obama Took Office?" really makes no sense... The unemployment rate was rising rapidly before Obama took office, and it took a few months for policies to kick in and stem the job bloodbath. A better question would be "What Caused the Rise in the Unemployment Rate Starting in 2007?" The answer to that would be the housing crisis and the resulting crisis in banks and lending institutions. But that is outside the scope of this article.

    What sources are you using for the unemployment data?

    All of my employment number reports and graphs are based on monthly reports and data published by the Bureau of Labor Statistics. Monthly numbers reports are based on the monthly Employment Situation Report and Database tables published at the www.BLS.gov website.

    The Employment Situation report includes month over month and year over year jobs numbers.

    The database tables that I use for the numbers here are:

    1. Employment Level LNS12000000 (Seasonally adjusted) & LNU12000000 (Unadjusted).
    2. Unemployment Level LNS13000000 (Seasonally adjusted) & LNU13000000 (Unadjusted).
    3. Unemployment Rate LNS14000000 (Seasonally adjusted) & LNU14000000 (Unadjusted). 
    You can find these tables by searching for these table numbers at the BLS website. My analysis is taken from the monthly BLS data copied to an Excel spreadsheet every month. I calculate detailed percentage increases/decreases, 3 month numbers, 2011 to date numbers, and I compare jobs numbers to those at the time of Obama's inauguration and at the "trough" of the recession.


    Updated 6/16/2012:  Someone left a comment:
     The one thing none of these reports show nor do any of the Government reports, and that is the number of independent contractors that are unemployed or the number of unemployed that the benefits have run out and they gave up on trying. These added in would make these numbers on the reports look miserable.
    Please read my reply to this person as listed in the comments.  Both groups of people, the independent contractors who are unemployed, and the unemployed without benefits who are still actively looking for work,  ARE included in these numbers.  ALL numbers of people who are unemployed, working part-time, or who want work have decreased significantly over the past year to 18 months.  Therefore, the reports are no more miserable than they look.  

    12 comments:

    1. The one thing none of these reports show nor do any of the Government reports, and that is the number of independent contractors that are unemployed or the number of unemployed that the benefits have run out and they gave up on trying. These added in would make these numbers on the reports look miserable.

      ReplyDelete
    2. Job growth and employment numbers are tied hand in hand.

      ReplyDelete
    3. Independent contractors who have not worked in the last month and are actively searching for work are included in the unemployment rate. The unemployment rate is a statistical sample based on people (not employers), taken from the Current Population Survey conducted for the Bureau of Labor Statistics by the Census. A statistically scientific sample of 60,000 households, about 110,000 people, are queried monthly. The people are surveyed on a revolving basis. The questions asked of these people include their employment status during the past month; whether or not they are working, whether or not they are working full-time; whether or not they are actively looking for work. In May 2012, 503,000 people were considered unincorporated self-employed workers who were not working and who were actively looking for a gig. That's down from 636,000 a year ago. 9,627,000 were considered unincorporated self-employed workers who were employed in May 2012. The unemployment rate of self-employed unincorporated people, which would include 1099 independent contractors, has decreased from 6.1% to 4.9% over the past year.

      ReplyDelete
    4. The number of people who are unemployed has NOTHING TO DO with whether or not they get benefits. The BLS does not ask unemployed people whether or not they are getting benefits; they ask these people if they have actively looked for work n the past month. If they are actively looking for work, they are counted among the unemployed. If they are not actively looking for work, they are counted as "not in the labor force". That group is asked whether or not they "want a job now". If they "want a job now" but haven't looked for work in the past month, the reasons that they are not looking for work are tabulated. The number of discouraged workers, those who have given up looking for work because they believe there is no work for them, was around 464,000 before the recession. It went up to about 1,200,000 in late 2009/early 2010, but is now down to about 830,000 people.

      Many people out there are still struggling, but all numbers of people unemployed have improved quite a bit over the past year to 18 months.

      I will post some links to other articles about these topics later today.

      ReplyDelete
    5. Hi Molly - I was very interested in the charts you've posted with the unemployment figures during President Obama's administration thus far.

      I think it would help enormously to cite your sources. I'd love to share your post, but my readers are going to want to be able to verify your figures. Did you get them from the CBO?

      ReplyDelete
    6. My numbers are all from the Bureau of Labor Statistics. The CBO does not, as far as I know, release monthly employment numbers, and all employment/jobs numbers that they do use are from the BLS. I did include a paragraph about sources used at the end of my article, but I have enlarged that paragraph and added more detail.

      ReplyDelete
    7. Molly - it would help if you actually understood the BLS stats you posted. You may want to start w/shrinkage of the overall workforce/participation rate under Obama.

      If there were 100 people in the workforce and 90 of them were working, the unemployment rate would be 10%.

      If the workforce is shrunk to 85 people and 80 of them are working, the unemployment rate would be about 6%.

      15 people are missing from the workforce + another 10 are counted as not working. Where is the calculation for those 25 people? If you go back to the original number in the workforce, the unemployment rate isn't very pretty, is it?

      ReplyDelete
    8. Why should I answer a comment that is basically insulting? Have you bothered to search my blog of information (and charts) about people "not in the labor force"?

      Please reply to the following question and I will be very happy to address your concerns:

      If counting unemployed people were up to you, which of the following groups of people would you count:

      1. People unemployed who have actively looked for work (applied for a job, sent out a resume, went for an interview, etc.) in the past month.

      2. People who are unemployed and who actively looked for work three months ago but have not looked since then because they are ill.

      3. People who are unemployed but have not looked for work at all in the past year.

      4. People who are retired and don't need to work.

      5. People in high school actively looking for a part-time job.

      6. People enrolled in college full-time actively looking for a job, either full or part-time.

      7. People working 20 hours a week who really want a full-time job but haven't actually applied for any other jobs in the past month.

      8. People who have left the work force temporarily because they are tending their children. They are planning on returning to work when their children are older.

      9. People who have been laid off who have enough money on which to retire, so they are no longer looking for work.

      10. People who are self-employed but haven't done any work for their small business for two months.

      O.K., which of these people would you consider to be unemployed?

      ReplyDelete
      Replies
      1. Also what about the people that were self employed, no longer employed, but were not eleigibale for unemployment to begin with. MOST self employed people are not eligible because they receive 1099's, file schedule c's at the end of the year. Most do not pay themselves a payroll check and take taxes out on themselves, so they therefor are not eligible for unemployment. This would be most hair dressers, construction workers, truck drivers, small businesses.

        Delete
      2. Try this link:

        How the Unemployment Rate is Calculated

        The unemployment rate has NOTHING TO DO with whether someone is or is not getting unemployment benefits.

        Delete
    9. Anonymous,
      Why have you failed to address Molly's questions? Obviously, I am asking a rhetorical question. Good job Middle Molly.
      Ted.

      ReplyDelete

    I appreciate intelligent comments and questions, including those that are at odds with anything posted here. I have elected not to screen comments before they are published; however, any comments that are in any way insulting, caustic, or intentionally inflammatory will be deleted without notice. Spam will also be immediately deleted.