Employment. Where is Hercules?

This post is about employment in the US and how it has changed since 2007. Most of us know that the situation is not pretty but this six year perspective suggests the problem may be deeper than we think. This post is not about the solutions -- it is more about the depth and nature of the problem. The table below contains data from the Household Survey conducted monthly by the US Bureau of Labor Statistics ( www.bls.gov ). These statistics compare household employment status in the latest period (end of 2013) with the year before (end of 2012) and with six years before (2007).

The bottom line is that while the US economic recession technically ended in the middle of 2009, despite all we have done to promote rapid growth with policy, the economy remains a far cry from where it was in 2007. If we were discussing the results of a weight loss clinic we would provide you with a beginning weight and compare that to our present weight. The usual diet advertisement shows a svelte Dan Marino next to his puggy former self. If we use this technique to describe the US labor force we would start with a svelte image and end up six years later with something that looks a little like a whale.

Some of you will point your finger at failed monetary and fiscal policy. Unprecedented levels of aggregate demand policy leaves us bloated. Others would say we are paying for greed. Still others point to globalization, industrialization, education, or changes in demographics. Likely the problem is a blend of all that and more. But the fact remains, if you do the comparisons, you have to be bowled over by the dimensions of the problem. Neither side of the political spectrum has been effective in advocating and implementing anything close to a remedy. The data below suggest it is time to stop politicizing and start scratching our collective head. No, let’s not compromise on simplistic, naïve, and politically digestible policies. The policy decision is a whole other thing! But let's at least start with a measurement of the problem.

This is the “before” photo. (m means millions)

                                                    Dec. 2007

Populations 16+                                 233.2 m

Employment                                      146.3 m

Part-time Employment*                         4.8 m

% of population in the labor force         65.9%

Number of people unemployed              7.4 m

People want in the labor force               4.4 m

Sum of last two items                         11.8 m

Unemployment rate                   4.8% or 7.7%

Where are we today?                 

                                                     Dec. 2013

Populations 16+                                246.8 m

Employment                                     144.4 m

Part-time Employment*                        8.0 m

% of population in the labor force      62.6%

Number of people unemployed           10.0 m

People want in the labor force              5.9 m

Sum of last two items                        15.9 m

Unemployment rate                6.5% or 10.3%

*Part-time work for economic reasons – meaning they would have preferred full-time work.

Conclusions

Population grew in those six years between 2007 and 2013 by 13.6 million people, yet employment fell by 1.9 million persons. As a result of these two factors we went from almost 66% of the population working to less than 63 percent. If employment had reached 65.9% of the population by December of 2013, employment would have stood at 162.6 million. So one conclusion is that if we used 2007 as a point of comparison, employment in the US today is about 18.2 million below where it should be (162.6-144.4). In the year between December 2012 and 2013 employment increased by 1.4 million people. That is a start. But notice at that rate it would take more than 13 years to hit an employment to population ratio of 65.9%. Of course 13 years assume that population growth is zero and we know it won’t be. Main point – we need more like 3 million new jobs per year to return to past employment. We are still a long way from that kind of growth.

Not only did employment fall in six years but another 1.5 million people who wanted a job simply quit looking and were deemed outside the official labor force. Between the two figures we have 15.9 million people wanting a job – 4.1 million people more today wishing they had a job compared to the number 2007. While the official unemployment rate went from 4.8 to 6.5 percent, the rate that includes these discouraged workers went from 7.7 to 10.3 percent.  Of course there are now about 8 million people who were included in the employment statistics in 2013 who say they are seeking full-time work. That compares to only about 4.8 million in 2007 who said they were part-time because of economic reasons. Adding these folks to the employment challenge just makes the challenge even taller.

We have a massive challenge in 2014. I grew up in an America that was full of hope and optimism. We had our share of wars and social problems but we believed that our economy would provide jobs and careers. If we continue down the current employment path for many more years people doing the right things and who graduate from schools will find themselves wondering if and when they will be gainfully employed. For too many reasons to mention here, this is not what we want for your children and grandchildren.

The proportions and risks today regarding employment are not too different from other major challenges we have faced in the US. But like Sputnik or terrorism, it will take a major concerted effort to make a dent in the problem. Unfortunately we have a government that will need a lot of prodding. Congress looks more like a herd of goats about to go over a cliff than a group intent on solving and implanting real programs for economic and employment growth. The President offers no real comprehensive realistic path either. 

BLS TABLE:

	Dec 2007	Dec 2012	Dec 2013	Change: One year	Change:    Six year
Pop	233,156.0	244,350.0	246,745.0	2,395.0	13,589.0
CLF	153,705.0	154,904.0	154,408.0	(496.0)	703.0
LFPR	65.9	63.4	62.6	(0.8)	(3.3)
EMP	146,334.0	143,060.0	144,423.0	1,363.0	(1,911.0)
EMP:POP	62.8	58.5	58.5	-	(4.3)
EMP PT	4.8	8.2	8.0	(0.2)	(4.3)
UN	7,371.0	11,844.0	9,984.0	(1,860.0)	2,613.0
UN RATE	4.8	7.6	6.5	(1.1)	1.7
NOT IN LF	79,451.0	89,445.0	92,338.0	2,893.0	12,887.0
WANT in LF	4,398.0	6,532.0	5,932.0	(600.0)	1,534.0