Tuesday, January 28, 2014

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, na├»ve, 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


11 comments:

  1. Dr D, what we need is a good dose of supply side policies with judicious government OVERSIGHT and not micromanagement. We'll never see that, though, and what we'll get is a mish mash of Keynesian-Krugman. Things will not improve until all of the wonks plunge over the cliff. Sadly, they'll take the whole country with them........which may be the only thing that gets up back on the right path.

    ReplyDelete
  2. Dear LSD. Yer equivocation RE: “This post is not about the solutions.” and its preface, which I repost here fer context:

    “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.”

    I respectively take exception—particularly with “Neither side. . .” I unnerstand your predilection for equivocation and balance . . . but on the great macro picture screen of what has woiked and not woiked the Academy Award goes free markets and (fettered?) capitalism.

    The R’s have proposed numerous amendments to Obummer’s executive actions in healthcare, job creation (aka his laser on job growth, et al). All of Obummer’s initiatives have proven feckless, flaccid. His actions—or inaction—your choice—demonstrate the failure of Democratic philosophy and particularly Obummer’s socialistic tendencies. Big Govomit cannot solve ‘merica’s economic problems—macro or micro. It’s time for R solutions.

    This post not ‘bout solutions? . . . ‘ow ‘bout making it simple and support pulling the red lever?

    Tunas can be blue or red, but Starkist prefers’m red—better tast’n and better fer ye . . . .

    ReplyDelete
    Replies
    1. Look closely Tuna -- I said neither side has been effective in advocating and implementing. I stand by that despite the ideas of some Rs. And also -- W proves that having an R in office is not sufficient to get effective solutions. It will take both parties to come with anything with lasting impacts. But then with the people in both parties it is hard to imagine a good solution. Ugh.

      Delete
    2. Dear LSD. I did look closely: ergo my nod to yer equivocation and balance. Ergo my Academy Awards vote for free markets/capitalism for which the Rs at least articulate support via less regs, tax reduction/reform, smaller govomit et al—not so the Ds. So, to the extent it will take a Congressional village to enact “lasting” impacts, that will not happen—unless—unless—unless—as I say to vote red across the board.

      That W proves having an R in office is not sufficient and necessary conditions for lasting impacts—my vague recollection is that his economic performance despite 9/11 is a not just a shining star but a roaring meteor compared to results of current socialistic measures enacted or executive fiat due to too many Ds in office. Pardon my repetition, but voting R in ‘08/’12 would have produced more lasting (beneficial) impacts than 7% unemployment (actually closer to 15%) and much, much less turmoil in healthcare and ramifications.

      Delete
    3. The Rs might be the lesser of two evils but I don't trust either party to do what is necessary.In todays context I doubt Rs would be as effective as you hope.

      Delete
  3. Employment: Yes there has been some growth but at what level and does it replace the spending power lost ? If no then there will not be the same level of consumer spending there was before unless prices drop (deflation) or excess credit is used ( bad outcomes start here). Is shoving money at Federal contracts going to insert more dollars in the economy and thereby stimulate more part time or maybe full time low paying service jobs? Will those jobs in turn stimulate spending which in turn will act as a catalyst or is that Keynesian thinking? This is a very big problem….and will affect investment for years to come and reduced investment means a flat economy. Ok the richest country in the world can be flat for a long time before the others catch up…but that is not the point. The point is the effects on this economy affect the others …we are in a global trade situation where all interact whether we like it or not.

    We tried dumping huge amounts of funds in the banks who for the most part sat on it. There is an old saying……demand stimulates supply…not the other way around. If the jobs pay less or do not materialize in a sustainable fashion…..then demand shrinks.

    ReplyDelete
  4. I think Obama is a poo poo wee wee head.

    ReplyDelete
  5. The Keynesian multiplier is extremely divisive.

    ReplyDelete