For those who are interested in the wonky numbers of the unemployment report, here is a brief presentation of some of the more ominous figures. The latest unemployment report shows that we are living through the quintessential Keynesian economic recovery. We are not shedding more jobs at a terribly fast pace, but, instead of adding jobs by a pace of 500-800,000, we are stagnating at the bottom of the employment trench created by the recession.
- Jobs created in July: The net increase in new jobs this month was 117,000. There were 154,000 jobs added to the private sector, while the public sector shed 37,000. As such, the number of unemployed declined from 14.087 million in June to 13.931 million, lowering the unemployment rate from 9.2% to 9.1%.
- Size of civilian labor force: So why is this report such bad news? Well, if you shrink the size of the pool, the unemployment rate will actually go down. While a net-117,000 jobs were added in July, 193,000 long-term unemployed persons left the labor force. In May, the civilian labor force stood at 153.693 million. Now, there are only 153.228 in the labor force, a shrinkage of 465,000 people. Of the remaining 153.228 in the labor force, there were 139,296,000 people working in July, down 38,000 from 139,334,000 in June. There are 490,000 less workers than there were in May. This is where you get the 9.1% figure.
- Size of working age population: While the number of people looking for jobs has shrunk, the population continues to grow rapidly. The size of the civilian noninstitutional population grew from 239.489 million in June to 239.671 in July, an increase of 182,000. Consequently, the employment-population ratio now stands at 58.1%, the lowest level since 1983. We need almost 200,000 new jobs just to break even, yet we only gained 117,000 new jobs, and actually lost 193,000 from the labor force. This is a recipe for disaster.
- Comparison to January 2009-Obama’s inauguration date: In January 2009, the labor force stood at 154.185. This means that a net 957,000 people have left the labor force since Obama was inaugurated. Concurrently, the size of the working age population grew over 4.9 million from 234.739 million at the time Obama was sworn in. Also, in January 2009, 142.201 million were employed, almost 2.9 million more than today. So we have a larger population, a smaller workforce (resulting from discouraged workers), and more unemployed. As a result, there are almost 5.9 million more working age people who are not in the labor force today. Also, there are 885,000 more people not in the labor force who want a job as compared to January 2009.
- Duration of unemployment: The average (mean) duration of unemployment is 40.4 weeks, a record high. By comparison, the average duration was 19.9 weeks in January 2009.