AUG#: +130,000 jobs.

Unemployment up at 3.7%...AUG jobs under Trump HERE

Tuesday, January 20, 2015

What Was the Unemployment Rate When Obama Took Office (compared to now)? December 2014 update

This report has been updated HERE for June 2015.

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

(Unemployment rate then and now on the graph below.)

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

What was the unemployment rate at peak?  10.0%

What is the unemployment rate now?  Today's unemployment rate (December 2014's)?   5.6%  

All Latest Jobs and Unemployment Reports HERE

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?

Please read below the graph.

The following chart shows the unemployment rate in three month intervals plus the last three months:

 Why are there two lines, one for "Seas Adjusted" and one for "Unadjusted" in the chart above?  This is explained at the bottom of the article.
  • What Caused the Rise in Unemployment When Obama Took Office?  Obama caused the unemployment rate to rise?  (Continue reading; the answer  is below the fold.)
  •  What Was the Unemployment Rate When Bush Took Office?  How high did it rise?  (The answer is also below the fold.)  

Sunday, January 18, 2015

Have Wages Finally Turned the Corner?

Is the middle class "dying"?

For years we have been hearing from the Bureau of Labor Statistics, the Census Bureau, from private foundations and think tanks, on both the left and the right side of the political spectrum, that the "middle class is dead", that "middle class wages and income are declining", etc. etc.

Is this true?

Well, the inflation adjusted average income for non-supervisory and production workers, peaked back in 1972-1973, as you can see from these charts:

Above:  Average Weekly Earnings of Production and Non-supervisory Employees in 1982-1984 dollars.  BLS table CES0500000031.
Above:  Average Hourly Earnings of Production and Non-supervisory Employees in 1982-1984 dollars.  BLS table CES0500000032.

"Regular" workers, factory people, blue-collar workers, administrative workers, most transportation and utility workers, the workers included on these charts, have never recovered back to that peak of wages that they earned back in 1972-1973.

The average wages of "regular" workers declined in the early 1970's, pulled up a bit in the mid 1970's, and then really plummeted.  The big culprits in the late 1970's and early 1980's were the serious inflation of the late 1970's, caused to a great degree by the problems of oil supply in the 1970's, and then the Reagan Recession of the early 1980's.  Even though the economy recovered from the Reagan Recession, you can see from the charts that average wages of "regular" workers kept declining and bottomed out in early 1993  Clinton rallied his campaign workers with the slogan "It's the economy, stupid!", and that was true.

Regular workers had lost about 24% of their inflation-adjusted earnings between early 1973 and 1993, from a peak of $347 (inflation adjusted) in early 1973 down to $266 in early 1993.  

But average wages did start back up.  The 1990's were not a bad time, though I do know many people who struggled as their companies were merged, shuttered, jobs sent to other companies, etc.  This was particularly true if they were older.  

These regular worker wages meandered in the 2000's.  They were also pulled artificially up during the recession, which brought with it deflationary prices.. and wages that LOOKED higher.  Unfortunately, many fewer people were working, as we lost over eight million jobs during that recession.

But starting in 2011, regular average wages have pulled up, and they are now higher than they have been at any time since 1979, even with 11 million more people with jobs.

So "the end of the middle class" may well be a myth, but that doesn't mean that we shouldn't all be concerned.

We are still 13% below the highs of 1973, but we are 12% above the lows of 1993

There are many things that this chart doesn't look at.  I'll be investigating some of these things in the coming weeks, so check back.  These charts don't look at median income, median family income, income left after taxes, etc. (The latest Census numbers do finally show an increase in the inflation-adjusted median household income... more about that later.)  These charts only account for people who are working, not those who have retired, and we have more and more retirees every year now and we will for at least another decade.

But, starting after we turned the recession corner in mid 2010, inflation-adjusted wages for the middle class, for the "regular" worker, have risen more than at any time since the Clinton years.   

Friday, January 9, 2015

93 Million People Not in the Labor Force!

Almost 93,000,000 (now 94,000,000?) people are not in the labor force in this country!  Are they unemployed? Did they "give up"?


Latest Nov. 2015 numbers details HERE.
December numbers to be released Friday, January 8, 2016.
Note:  This report, the breakdown of people not in the Labor Force, was updated for April 2015 HERE. As it does not change very much month to month, it will not be updated for several months.  For other information on the labor force, please visit THIS LINK.

Where do these 93,000,000 people not in the labor force get money?  How do they live?  How do they eat?  (The breakdown of these 93 million (94 million) below will help to answer that question.)

Some are lamenting:  "The number of people NOT in the labor force increased by 1,200,000 over the past year and by 456,000 over the past month!  It just keeps going up!     This must be a horrible thing!  Why do so many people keep "dropping out" of the work force?  Is the government lying to us about things getting better?  This can't be any kind of recovery.... can it?"

Continue reading below.....

Breaking down the "Not in the Labor Force" pie:

As usual, whenever the unemployment rate ticks down, as it has been over the past five years, the naysayers will point out --- with alarm --- the increasing number of people who are "not in the labor (work) force". The assumption seems to be that the job situation is so miserable that people are dropping out of the labor force, ceasing to look for work, by the droves.  (For the record, there are now 157,072,000 people IN the civilian labor force.  Definition below.) 

Let me make something clear:  YES, we STILL do have a problem with unemployment and underemployment in this country.  We've had a problem since the poor economic recovery of the early 2000's!  But misrepresenting the facts and numbers of labor participation and who is or who is not in the labor force will NOT clarify the issues of unemployment one tiny bit.  So let's look at some of those facts and numbers.

First of all, people "not in the labor force" are NOT "unemployed". "Unemployment" has a very specific meaning for labor economists.  The meaning of "unemployment" has NOT CHANGED in decades.  It means:

  1. People not working for pay, not for an employer and not self-employed.
  2. People who want a job or some kind of employment.
  3. People who are ACTIVELY seeking (within the last four weeks) a job or some kind of employment.  People who want a job but who aren't looking for work are NOT considered unemployed, which makes sense.  (If you aren't looking for work, how is an employer supposed to find you?  Is the job fairy supposed to sit on your head?)  
The reality of people "not in the labor force" may be different than you have been led to believe.  Considering all of the hullabaloo about "people dropping out of the labor force", this chart may surprise you:

Who Are the People "Not in the Labor Force" (as of November 2014)?  

Did you notice that big pink chunk of the chart?

Those are people 55 years and up who are not only NOT working, not only NOT looking for work, but who say that they DO NOT WANT A JOB, at least not now.  And there are millions upon millions of people who fall into this category.. About 50 million of them.  More information below.

How do they survive and pay their bills?  If they are retired, they are surviving on pensions, on assets, on Social Security benefits, perhaps on part-time jobs.  And some of them probably have working spouses.

Are people really dropping out of the labor force?

Well, first of all, "dropping out" of the labor force for whatever reason, including  despairing of not finding a job, is not the definition of "not in the labor force".  Let's explore what it means when someone talks about people "not in the labor force" and people "dropping out of the labor force".   

How do you get to be "not in the labor force"? 

People "not in the labor force" first of all, have to be IN the "civilian non-institutional population age 16+";  in other words:

  • At least age 16, 
  • Not active military,
  • Not in prison, not in a nursing home or similar institution.
  • There is no upper age limit to the "civilian non-institutional population ", so 85 year old grandmas would be counted as "not in the labor force" if they live at home or with family vs. a nursing home. 
To be "not in the labor force", people are not employed  at all, not full time, not part time, not self-employed.  They can also not be actively searching for work.  If they have been actively searching for work in the past four weeks, they are considered to be "unemployed".  (See the discussion a few paragraphs above:  If a person is unemployed, "actively searching for work" according to the Bureau of Labor Statistics, they have made at least one attempt to find work in the prior four weeks through such means as submitting an application, going for an interview, or talking to a potential employer.)

Let's repeat this:  

  • People in the civilian non-institutional population who are actively, officially unemployed are IN the labor force.
  • People in the civilian non-institutional population who are employed (full-time, part-time, self-employed) are IN the labor force.
  • All other people in the civilian non-institutional population are NOT IN the labor force.

How do people "drop out of the labor force"?

1)  They stop working and they do not look for work. (Think RETIREMENT.)   Or:  2)  They were unemployed and they stop looking for work.  There are a few exceptions:  People who are on temporary layoff from their jobs are in the labor force and are counted as unemployed and do not have to look for work while they are on temporary layoff.  People who are ill or on vacation but have a job and intend to return to work ARE in the labor force and are counted as employed.  

People may leave the labor force if they quit their jobs to stay home with their children, if they become disabled and cannot work, if they retire.  Also young people in high school or college may not be working and may not be looking for work while they are enrolled in school.  

But "dropping out of the labor force" is not necessarily the same as being "not in the labor force".  When young people turn 16 years old, unless they have a job or are actively looking for a job, they are "not in the labor force" by definition.  Since they never were in the labor force, they haven't dropped out.

Also assuming that people who leave the labor force do so because they are in despair about not finding a job is a very bad, very misleading assumption, as you will see at the bottom of this page in the discussion of labor market "flows".     

What we know and don't know about people "not in the labor force"

First, we have no idea WHY most people are not in the labor force; that is, we don't know why someone stopped working, is no longer looking for work,  or never worked or looked for work, which is the definition of  "not in the labor force". Did they retire? Go to school? Stay home with a baby? Become disabled? Did they stop looking for work because they gave up on finding work?  Are they independently wealthy and don't need to work?  We don't have definitive answers to these questions. 

We DO know, however, how many people not in the labor force (who aren't working or actively looking for work) "want a job", and we have some figures on why those people who "want a job" have not looked for work in the past month. We also have a good idea about how many might be so discouraged that they decided to stop looking for work.  We know more about the 16-24 year old crowd and how many of them are or are not still in school.

How are the people "not in the labor force" living and paying their bills?

Based on the demographics of the people "not in the labor force", we know that most of them are retired.  They are surviving on pensions, assets, Social Security benefits, perhaps part-time jobs, and some of them probably still have a working spouse.

The next largest piece of the pie are students; if they are in high school or college, they are probably being supported by their parents.

People from 24 to 54 who are not working are probably mostly people home with children.  They are being supported by the working spouse.  

People Age 55+ 

Yep, that big bright pink piece of pie on the chart above represents 49,555,000 people who are 55+ years of age and claim that they DO NOT want a job.  That is over half, actually 53.5%, of the 92,547,000 people in the "civilian non-institutional population age 16+" who were "not in the labor force" in November. 

Notice the relatively tiny slivers of people in this age bracket who want a job but have not looked in the past year ( yellow sliver), and the even smaller sliver of people in this age bracket who want a job and HAVE  actually looked for work in the past year (green sliver).  Over all, 55.3% of the people "not in the labor force" are 55 or over.  That's 51,219,000 out of 92,547,000.  To repeat, of the 51,219,000 people 55+ and over not in the labor force, 49,555,000, or 96.8%, say that they DO NOT want a job.

As we said above, over half of the people "NOT in the LABOR FORCE" are in that one big bucket.  And that percentage has gone up about 2% over the past 18 months. 

People Aged 25-54

We know less and can surmise less about the 25-54 year olds who are not in the labor force.  Again very few of them "want a job" when compared to the people in this age group who DO NOT "want a job".  We can assume that many in this group are people who are home with their children, but we don't know this from any statistics provided by the Bureau of Labor Statistics.

We know that there are about 23,734,000 people aged 25 to 54 who are not in the labor force and that most of them, 20,977,000 (88.4%) do NOT want a job.  Those people are represented by the silver pie piece.  The smaller slivers of pie represent people who are not in the labor force but want a job and HAVE looked for work within the past year (aqua blue sliver of pie) and people who are not in the labor force but want a job who HAVE NOT looked for work in the past year (coral sliver of pie).  

People Aged 16 - 24

The Bureau of Labor Statistics includes people who are 16 or over, not in the military, and not institutionalized as part of the "civilian non-institutional population".  This includes young people in high school and college.  

It should not be surprising that a very low percentage of these young people,  55%, are "in the labor force"; that is, they are either employed or actively looking for work.  Also, most people in this age group who are "in the labor force" are either working part-time or looking for part-time vs. full-time work.  Very few teenagers (16 to 19 year olds) say they want work want full-time work.  Only about 3% of 16 to 19 years olds want full-time work.  

The overwhelming majority of people who are "not in the labor force" in the 20-24 year old age group are people who are in school (red piece of pie).  A much smaller population is not in school and not in the labor force (blue piece of pie).  In this group of people who are not in school and not in the labor force, women outnumber men about 2 to 1, so we can assume that at least some of these people are not in the labor force because they are tending young children.  

The Civilian Labor Force numbers

There are 249,027,000 people in the "civilian non-institutional population 16+" in this country in December 2014.  156,129,000 are IN the civilian work force, meaning they are either employed or actively looking for work.  92,898,000 (in seasonally adjusted numbers) are "NOT IN the labor force" meaning they are NOT employed or earning money through labor and they haven't looked for work in the past month, though they may have been employed or looked for work in the past year.  (The numbers used in the graph are seasonally unadjusted "raw" numbers, as the breakdown isn't available in seasonally adjusted numbers.  As a result, the total of people not in the labor force is a bit larger in "raw" numbers than it is in seasonally adjusted numbers.)      

Breakdown of those "Not in the Labor Force"

The pie represents the breakdown of the 93,506,000 people NOT in the labor force in December 2014 in numbers that are NOT adjusted for seasonal variation:

Age 16 - 24:  17,941,000 people

  • In school:  14,398,000  (red piece of pie - 15.4% of pie)
  • Not in school:  3,543,000 (blue piece of pie - 3.8% of pie)
  • (Note:  Some of both groups want a job (1,896,000 in total), with 950,000 having looked in the past year.  This is not broken down on the pie chart above.) 
Age 25 - 54:  23,912,000 people
  • DO NOT want a job:  21,336,000 (silver piece of pie - 22.8% of pie)
  • Say they want a job but HAVE NOT looked in the past year:  1,296,000 (coral piece of pie - 1.4% of pie)
  • Want a job and HAVE LOOKED in the past year:  1,281,000 (aqua blue piece of pie - 1.4% of pie)
Age 55+:  51,652,000 people
  • DO NOT want a job:  49,913,000 (bright pink piece of pie - 53.4% of pie)
  • Say they want a job but HAVE NOT looked in the past year:  1,067,000 (yellow piece of pie - 1.14% of pie)  
  • Want a job and HAVE LOOKED in the past year:  672,000 (green piece of pie - 0.7% of pie)  
Labor Force "Flows"

The labor force is very volatile.  Millions of people are hired, fired, or quit their jobs every month.  Millions join and leave the labor force every month.  The monthly jobs reports use "net" numbers, so the number of people employed this month, for instance, is equivalent to the number of people who were working in the last month PLUS the number of people who were hired in the last month MINUS the number of people who were "separated" (quit, laid off, fired, retired) in the last month.  When we have more people hired than people who quit, were laid off, or retired, we have INCREASES in jobs and employment.  When we have more people who quit, are laid off, or retired than we have people who were hired, we have DECREASES in jobs and employment.

The "flows" reports tell us how many people moved from "employed" to "unemployed" or from "not in the labor force" to "employed" every month.  I haven't yet recently updated this information, but in
 April 2015, 4,341,000 people who had been employed in March left their jobs and are not looking for other jobs.  Retired?  Disabled?  Taking a temporary break from employment?  As mentioned above, we really don't know, but we do know that they had a job in March and now they aren't even looking for work.  Despair?  If they aren't looking for work?  Not likely, as they were working last month!

Meanwhile, this group is largely offset by 4,296,000 people who were not in the labor force in March who looked and found jobs.  We have 45,000 MORE people "net" who were employed in March but are now not in the labor force.

Meanwhile, 2,132,000 people who were unemployed (actively looking for work) in March 2015 stopped searching for work for some reason, perhaps including despair, but we don't know that for sure.  This group was offset by 2,296,000 people who were not in the labor force in March but started looking for work (and thus became officially unemployed) in April.  So we actually had 164,000 MORE people in the labor force and looking for work in April than in March.

What's the bottom line with this "flows" stuff?

The bottom line of "flows" is that the biggest increase in people "not in the labor force" came from people leaving EMPLOYMENT, NOT from people giving up job searches for whatever reason, including despair.

More information about people "Not in the Labor Force" and the Labor Participation Rate HERE.
The numbers for this article were taken primarily from these two Bureau of Labor Statistics charts:  Persons not in the labor force by desire and availability for work and Employment of the civilian non-institutional population 16 -24 years of age.

How Many Jobs Has Obama Created or Lost? (December 2014 update)

This report has been updated for April 2015 HERE!

How many NET jobs created or lost under Obama* as of December 2014? 
How many private sector jobs have been lost or added during Obama's presidency?

How many new jobs in the last 6 years since Obama was inaugurated?  How many Americans were working or employed when Obama took office... compared to now?

Numbers for December with latest revisions:

Since the "trough" of the recession in late 2009/early 2010 in seasonally adjusted numbers:
  • 10,692,000 MORE payroll jobs in total
  • 11,215,000 MORE private sector jobs
  • 9,429,000 MORE people working (includes self-employed and agricultural workers)
How many workers were full-time or part-time at the "trough" of the recession in late 2009/early 2010 compared to now?

  • 9,375,000 MORE people working full-time.
  • 27,000 MORE people working part-time.  
  • (Yes, despite what you may have heard, from the depth of the recession until now, we have many more additional people working full-time vs. part-time jobs. When a recession hits, companies generally cut back on full-time workers first.  When companies start hiring again, the number of full-time workers increases.)

Since Bush left office & Obama took office (January 2009) in seasonally adjusted numbers:
  • 6,371,000 MORE jobs in total
  • 7,005,000 MORE private sector jobs
  • 5,290,000 MORE people working

How many workers were full-time or part-time when Obama was inaugurated compared to now?

  • 4,116,000 MORE people working full-time
  • 1,129,000 MORE people working part-time

Have any private jobs been lost (net) over the past 58 months since February 2010?

  • 58 months of consecutive private-sector job growth.
  • The longest consecutive period of private-sector job increases since this number has been recorded. 

Have any jobs been lost (net) over the past 51 months since September 2010?

  • 51 months of consecutive overall job growth.

Are more people unemployed now than when Obama took office in January 2009?  

  • Despite 1,919,000 MORE people in the labor force (either working or actively looking for work) now vs. January 2009, there are 3,370,000 FEWER people unemployed now than in January 2009. 

*What's the difference between "net" and "gross" jobs gained and lost?

Let's get something straight:  Jobs are lost every week and every month. People are fired, people are laid off, businesses or locations are closed and everybody is let go. 

Also people quit every week.  You yourself, dear reader,  may have quit a job at some point in time. 

But people are also HIRED every week and every month.  New businesses open, businesses expand, businesses replace people who have left or been fired.  Every week.  You yourself, dear reader, may have been hired for a job at some point in time.This happens in good times and bad. 

Yes, even in bad times, people are getting hired.  Even in good times, people are let go.  

Now:  The monthly jobs reportupon which this article is based, presents estimates based on surveys as to how many jobs are gained or lost in a given month.  Those numbers are based on the number of new jobs (people getting hired, businesses opening) MINUS the number of jobs that have been cut (people getting fired, people quitting, businesses closing or cutting back).

The monthly jobs report therefore reports NET job growth or loss.  

For 51 months in this country, we have had MORE jobs being added than we have had jobs being cut.  For 58 months in the private sector (not counting federal workers, state or local workers such as teachers, firemen, cops, or people who staff the DMV, only counting people who work for private businesses), we have had MORE jobs added than we have had jobs being cut.

To reiterate:  How many jobs have been created in the last 5 years versus how many jobs have been lost?
All numbers provided on monthly jobs reports, which is what the series on jobs created/lost under Obama is based, are NET jobs numbers.  In other words, they reflect gains after all job losses are subtracted, or they reflect job losses after all gains are added. 
For the past 58 months (as of December 2014), we have had NET gains in private jobs numbers every month.  In other words, in every month since February 2010, more private jobs have been created than have been lost.  In every month since September 2010, more jobs in total have been created than have been lost.  This is the longest consecutive period of job growth since these numbers have been recorded.
Fact check and important information on these jobs numbers...

The above jobs numbers are from the BLS jobs report of December 2014, which was released in early January 2015.  The surveys used to gather these numbers in August are taken as of the week which includes the 12th day of the month, in this case, December 12, 2014. 

December 2014 Unemployment Rate, Jobs

  • +252,000 new payroll jobs; +240,000 new private sector jobs.  These large increases are in line with estimates (reported below).
  • Unemployment rate declined .2% (two tenths of a percent) to 5.6%.  The number of people unemployed de/increased by 383,000.  The labor force declined by 273,000. 
  • Alternate unemployment rate drops to 11.2% (from 11.4%).
  • Labor force participation rate declined .2% as 273,000 people left the civilian labor force. However, 111,000 more people were employed in December.
  • Number of people working full-time increased by about 427,000 while number of people working part-time decreased by about 269,000.  That's 2,694,000 MORE people working full-time over the past year, since December 2013, and 72,000 MORE people working part-time over the past year. 
  • 2,952,000 payroll jobs have been ADDED in 2014 to date in seasonally adjusted numbers.
  • The is the largest number of jobs added in a year since 1999.
  • The number of involuntary part-time workers (people working part-time because they couldn't find full-time work) decreased 61,000 in December and dropped 976,000 over the past year, since December 2013.
  • The number of long-term unemployed (people looking for work over half a year) decreased 37,000 in December, and dropped 1,092,000 over the past year, since December 2013.
  • October and November jobs numbers revised upwards by a total of 50,000.

Since the "trough" of the recession in late 2009/early 2010 in seasonally adjusted numbers:
  • 10.7 million MORE jobs in total
  • 12.2 million MORE private sector jobs
  • 9.4 million MORE people working
  • 9.4 million MORE people working full-time.
  • 27,000 MORE people working part-time.  
  • (Yes, despite what you may have heard, from the depth of the recession until now, we have many more additional people working full-time vs. part-time jobs. When a recession hits, companies generally cut back on full-time workers first.  When companies start hiring again, the number of full-time workers increases.)

Since Bush left office & Obama took office (January 2009) in seasonally adjusted numbers:
  • 6.4 million MORE jobs in total
  • 7.0 million MORE private sector jobs
  • 5.3 million MORE people working
  • 4.1 million MORE people working full-time
  • 1.1 million MORE people working part-time

December 2014 reports: (Notation on the links will be changed to "December" or "Updated for December" when the updated reports become available.) 

Preview (written Thursday night):

The Republicans have taken over both houses of Congress and Americans are carefully following the latest developments of the terrorist shootings in France...  Meanwhile, the country appears to keep adding healthy numbers of jobs, with 2014 ready to be the best year for job growth since the Clinton boom year of 1999.

"The pundits" expect about 
250,000 more jobs when the BLS counts are released, with the unemployment rate dropping to 5.7%.  If there are many more jobs but the unemployment rate stays the same, this would be a good indication that more people have entered the labor force in December.

Some facts and numbers to ponder as we wait for the BLS release:
  • The ADP private payroller report came out yesterday which estimated an additional 241,000 private sector jobs in December. This means, according to ADP's estimates, that the US has added over 200,000 private sector jobs 8 out of the last 9 months.
  • Bloomberg believes that "The jobless rate probably declined in December to a more than six-year low, according to a Bloomberg survey as of Dec. 30, as employers added almost a quarter million jobs during the month to cap the strongest year for payroll growth since 1999.  
  • "The Rasmussen Employment Index which measures worker confidence continues to climb, hitting a six-year high for the second month in a row in December.
    At 104.2, worker confidence is up two points from the previous high of 102.4 in November."
  • But job search engine believes "that the U.S. economy added a net gain of only 170,000 jobs in December, well below the 250,000 consensus estimate."  Linkup's reasoning at the link.
  • October had the lowest average weekly number of initial unemployment claims since SPRING of 2000!  Weekly initial unemployment claims in November and December were also lower than they have been for years, though not as low as the claims numbers for October.
  • Census numbers show that we have finally turned the corner on inflation-adjusted median household income and it is slowly starting to increase.
  • Inflation-adjusted weekly and hourly wages for production and non-supervisory employees (which excludes most of the high income people) continue to creep up. These wages have been higher during the Obama years than during any six year period since the mid 1970's.
We can only imagine where we'd be in this economic recovery by now if the Republicans actually worked with Obama and the Democrats for the good of the country.