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Jobless Report: 8.6 percent?

December 3, 2011

From the U.S. Bureau of Labor Statistics: BLS

The Labor Department said Friday that employers added 120,000 jobs last month and claimed that the unemployment rate fell to 8.6% in November. Specifically, private employers added a net gain of 140,000 jobs last month while governments, meanwhile, shed 20,000 jobs, mostly at the local and state level, resulting in a net gain of non-farm payroll employment rise of 120,000.

Employment trended up in retail trade, leisure and hospitality, professional and business services, and health care. More than half the jobs added were by retailers, restaurants and bars, a sign that holiday hiring has kicked in. Retailers alone added 50,000 jobs. Leisure and hospitality added 22,000, with food service and bars up 33,000. In all, growth in non-farm payroll employment (+120,000) was lower than the 12-month average (+131,000).

And, the number of people who quit looking for work was 315,000. Once folks exhaust their extended unemployment benefits they’re no longer counted as being unemployed even if they are not working. Those are the people who after 99 weeks or more of being unemployed have said, “I’m done. I’m through looking.” So they’re not counted. Therefore, the universe of jobs available in the country is down by 315,000. That is called the labor force participation rate.

So, the Labor Force Participation Rate dropped 0.2% to 64%, from 64.2% in October, representing 315,000 fewer job seekers or put another way, 315,000 people leaving the workforce. Weekly unemployment claims have consistently been near 400,000 and only 120,000 jobs were created, BUT that equals a 0.4% drop in unemployment number? And, 120,000 jobs were created and 315,000 fell out of the labor force, and this moved unemployment down 0.4%?

With the unemployment rate hovering at or around 9.1% for the past two years, only the most politically deranged and woefully ignorant could possibly believe the hiring of 120,000 people could trigger a half-percent drop in the rate. We’re dealing with a serious form of manipulation of data. It is a corrupt number. You need at least 120,000 non-farm payroll jobs per month just to keep up with the population growth.

So, lets cut to the chase.

The key reason for the sharp drop was that hundreds of thousands of people had stopped looking for work coupled with a temporary up-tick in seasonal jobs. Yet, people left the workforce more than people found jobs at a rate of nearly 2:1. The average duration of unemployment rose from 39.4 to 40.9 weeks previously. That is your “improving” jobless picture in a nutshell. The trend indicates deep structural unemployment.

This is how it works: 120,000 people find work, 315,000 quit looking; those 315,000 are no longer called unemployed. Add those two numbers together and you get a grand total of 435,000, and that 435,000; the government says are no longer unemployed today. So 435,000 jobs were created. Just as we use a bogus method [fuzzy math] to justify federal spending with baseline budgeting, we also use bogus methods to calculate unemployment rates. Who are you going to believe the Government or your lying eyes?

And over time, when the job universe shrinks, so does the unemployment rate. Consider this: The job universe from January 2009 when Obama was sworn in to the present is down roughly 2.5 million jobs. There are 2.5 million fewer jobs in our country in the three years since Obama has been in office. You shrink the workforce by 2.5 million people and you can report that the unemployment rate went down. More people leave the workforce than found jobs, and unemployment rates goes down – and that’s a dirty little secret.

Even if you are generous, and assume half the people leaving the workforce retired (not due to a lack of job opportunities), this report means that one person is finding a job for every person that is giving up. That’s on top of the alarmingly high pool of people still looking for work but cannot find it. Job seekers have simply STOPPED LOOKING and retailers have ramped up temporary seasonal hiring. Half the 120,000 jobs came from either retailers or temp job agencies. And the Christmas surge in hiring will drop-off after the Christmas holidays.

When the unemployment rate declines, you want to see both employment and participation increase as discouraged workers return to the labor force. Today, we got the former, but not the latter, making the 0.4-drop suspect. You can also guarantee that the unemployment rate will give back some of its decline in the coming month. The change in total non-farm payroll employment for September was revised upward from +158,000 to +210,000, and the change for October was revised upward from +80,000 to +100,000.

There is no silver lining in this report for Obama as it relates to the job picture – or for America’s unemployed. The average workweek was unchanged at 34.3 hours, with hourly earnings falling two cents. Really makes me want to pop the champagne. From the corrupted statistical summary released today, this is how outlandish this report is; 0.4 divided by 8.6 equals 4.65% decrease. At that rate of decline, unemployment will be 0% in just about 20 months! Isn’t Obama wonderful?

Unless 263,000 jobs are created each month over the next 5 yrs, America will have a higher unemployment rate in Oct. 2016 than it did in Dec. 2007. How realistic is it that the US economy can create 15.8 million jobs in the next 60 months? People drop out of the labor force and some plop onto food stamps. When that happens, the aggregate debt grows, and the burden then just shifted from private debt to public debt. It’s much like rearranging deck chairs on the titanic.

Friday’s numbers is all calculated to create a false impression of economic recovery and a healthier job market. Yet, there were over 400,000 applications for unemployment compensation reported yesterday. Let me make this caveat for the agent provocateurs. Some, whose benefits have run out, may have decided to stay home with the kids or go back to school; start their own business, but are not “on the radar” yet; happily working under the table; or are almost-retired and are marking time until social security kicks in.

Not ALL are running around looking for jobs. But, assume most are. Labor force measures are based on the civilian non-institutional population 16 years old and over. The labor force is made up of the employed and the unemployed. The remainder – those who have no job and are not looking for one – are counted as “not in the labor force.”

The true unemployment using U6 numbers is 16%. What is U6? The U6 unemployment rate counts not only people without work seeking full-time employment (the government reports the U-3 rate), but also count “marginally attached workers and those working part-time for economic reasons.” The U3 is a government marker and that is what is reported. U3 is made up of people looking for work and people who have lost their jobs.

When you quit looking for a job, you’re only counted in the U6 number, which is not the one reported by the BLS. The U3 number is. So you drop out of the system altogether, you’re no longer counted by the Obama regime. Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week. For a more detailed explanation on U3 and U6 click here.

Obamanomics, i.e. EPA regulation’s, Obamacare, drilling shutdowns, threatened tax increases, out of control Fed spending and Trillions in new debt and the resulting debased dollar is poison to job creation. We have three years of proof. No President since FDR has ever won reelection if unemployment was over 7.5%. The Great Blizzard of dishonest government statistics continues under this Regime. This 0.4-drop is Bull$#@!

The US workforce is moving from discouragement to despair. Obama’s economy is Jimmy Carter malaise on steroids. Joe Goebbels had nothing on these guys. The job market is dead.

Charts:

Labor Force Participation Rate:

People Not In The Labor Force:

People Who Want A Job Now:

And Average Duration Of Unemployment:

One Comment leave one →
  1. FredTX permalink
    December 11, 2011 10:52 pm

    This analysis is as straightforward, to the point, and ruthless as it needs to be.

    Regardless of which side of the political aisle readers reside, this is an overwhelming indictment of the economic failures for the current administration. Any solutions needed must be quick, bipartisan, and result in real private sector jobs created QUICKLY. The only historical remedy which has a proven track record over the past 50 years is an unleashed economy which can create > 1 million tax paying jobs per month, as was done back in late 1983.

    If politicians ignore these facts and continue on their present course, it is to their peril and the demise of this country as we know it. Add to this the coming economic tipping point in the Eurozone, current U.S. deficit spending, and pending credit agency downgrades and we could easily be in for the worst recorded worldwide economic disaster ever.

    Thanks very much for putting together such a graphic reminder of how bad things truly are in our job market. The rest of us MUST get out of our comfort zones NOW and shame our leaders into proper economic judgment that extends past the next election cycle.

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