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Monday, September 10, 2012

For Every One New Job, Four People Stopped Looking?

"For every one net new job created, nearly four American people gave up looking for work and left the work force."


I've seen this in several places now based on numbers in Friday's government jobs report.


Time for Some Debunking of Those Right-Wing Talking Points:



Four people out of work for every new job created?

From a comment at Huffington Post:

Good News for Obama?

On Fri. the Jobs Report came in.  396,000 people gave up looking for work.

Only 96,000 new jobs were created. Translation for every one person getting a job, there were 4 people so disgusted that they left the job market. 

When this settles in, the numbers for Obama should plummet. 

Obama said that if he didn't fix the economy within 3 years, he would be a one termer. Let's hold him to his word. 

And for the 1st two years, he did not need a single GOP vote as we can see by the biggest Jobs killer, Obamacare/tax.



I'm not going to get into the benefits of ObamaCares here; I will say that we are a family that is looking forward to again having health insurance come 2014.  We can't afford insurance now, so we are just hoping that nothing goes really wrong.  I take it very personally when uninformed and/or people lacking in compassion say they want to repeal ObamaCares.

I'm also not going to deal with the "Obama promised to fix the economy in three years." b.s. either. 

My reply to the "gentleman" above:


It's much, much more complicated than that (referring to the four people who supposedly left the work force for every new job.)  Yes, 368,000 people left the work force (meaning they are no longer looking for jobs or working) and we only added 96,000 jobs.  (Both of those numbers are seasonally adjusted.)

But that doesn't mean that these people "gave
 up looking for work".  Many of them retired.  Some left work (or the search for work) to go to school, to stay home with their kids, etc.

We do know that only about 7-8% of people who are "not in the labor force" say they want a job.  Yes, the Bureau of Labor Statistics does ask people who aren't looking for work if they want a job.  

("Not in the labor force" refers to people who are 16 or older, not in the military, not institutionalized, who are not working and not looking for work.  People who are retired, people in school, people home with kids, people who are disabled, people who are independently wealthy, etc., are in this category.) 

Who Are These People "Not in the Labor Force"?

We also know something about the people are who are "not in the labor force" by age:


  • We know that the number of people "not in the labor force" in their prime working years between 25 and 64 DECREASED by 250,000 last month.
  • There are 100,000 MORE people not in the labor force aged 65 and over.  (Perhaps these people retired?)  
  • And there are a whopping 1,600,000 MORE young people 16 to 24 not in the labor force than there were in July.  (This number is not adjusted for seasonal variations.)  Why do we think these people are no longer in the labor force?  What happens to young people in August?  Did you guess?  They go back to school!
Back to school?  (Photo credit below.)

So...We've got people retiring and young people returning to school.  And we have MORE people in their prime working years in the labor force.  What we don't have are people dropping out of the work force in utter despair.      


Employment and labor force participation actually went UP for people 25 and over:


  • About 210,000 MORE people 25+ are in the labor now vs. July.  
  • 396,000 MORE people 25+ are employed.
  • About 190,000 FEWER people 25+ are unemployed.  

In conclusion:

The numbers do not at all support the claim that 4 people were so disgusted that they left the job market for every one person getting a job.  


Young people stopped working and stopped looking for work in droves...  because they are returning to school.

A last comment on ObamaCares:


I had to add this when I replied to the comment above:
And shame on you for wanting people to suffer and die without health insurance.


5 comments:

  1. Obviously students returning to school are part of the group of people "dropping out of the work force."

    But if that was ALL that was going on, we would expect to see a very similar trend every August, right? But we don't. Here are the figures for the month-to-month change (July to August) over the last 10 years:

    2002 + 206,000
    2003 - 40,000
    2004 - 128,000
    2005 + 347,000
    2006 + 339,000
    2007 - 305,000
    2008 + 166,000
    2009 - 219,000
    2010 + 325,000
    2011 + 316,000
    2012 - 368,000

    No clear pattern there, as far as I can see.

    But as I noted in my comment to a previous post, these figures come from the "household survey" which is quite volatile, and probably not very accurate for detecting changes on a month-to-month basis.

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    Replies
    1. The trend is more apparent if you look at unadjusted numbers of people who left the labor force in August, and even more apparent if you look at the unadjusted numbers of people 15-24 who left the labor force.

      I also noticed that the 12th day of the month fell on a Sunday this year. Last year it fell on a Friday.. which means that the survey week for this August was more likely to be the week in which kids quit their jobs to return to school than it would have been last August.

      I'll finish this tomorrow, because it appears that the actual day of the 12th may be very meaningful in terms of this month's numbers.

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    2. As I wrote, the 12th day of the month was a Sunday. The week containing the 12th day of the month was the week ending Saturday, August 18th. In 2011, the last day of the month was the week ending Saturday, August 13th. This doesn't seem like a big difference, but it makes a big difference in terms of people returning to school. Young people are more likely to stop working and return to school in a week ending August 18th than in a week ending August 13th.

      The last time that you see a big jump in the number of people who left the labor force in August was in 2007, a boom year. That was the last time that August 12th was on a Sunday.

      You published the numbers of the change in the labor force between July and August in adjusted numbers. I'm working on another blog article on this whole topic, but here is the change in the labor force in unadjusted numbers for 16-24 year olds:

      August 2002 -1194
      2003 -1245
      2004 -1219
      2005 -1103
      2006 -1030
      2007 -1538
      2008 -1343
      2009 -1417
      2010 -974
      2011 -855
      2012 -1630

      You can see that a huge number of young people leave the labor force every August. Why so many more leaving this August? In addition to the August-12th-on-a-Sunday situation, the big reason is that more young people were employed this summer than we have seen in several years. The employment population ratio of people 16-24 this summer was up to 46.2%, higher than it has been since 2009, when we were still losing jobs at a huge rate. The unemployment rate among young people this summer, while still higher than it was in the early 2000's, is lower than it has been for four years.

      For comparison, there is the unadjusted change in the labor force of people 25+:

      August 2002 + 570
      2003 +390
      2004 +168
      2005 +452
      2006 +287
      2007 +161
      2008 +430
      2009 +58
      2010 +382
      2011 +387
      2012 +358

      So.. the number of people 25+ added to the labor market is just a little short of the number of people added to the labor market the past two Augusts, and higher than the number of people added to the labor market in many recent years.

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    3. Thanks. That all makes sense to me.

      I really enjoy your blog, by the way. Lots of good, solid info, explained clearly. I appreciate that. Keep up the good work!

      Delete
    4. Thanks, TRA! I do try to get back and answer all of my comments, but sometimes it takes a day or two.

      Delete

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