November: Job Numbers Explained
The U.S. economy added jobs at a much slower pace in November than in October, the highest since April, underlining continued weakness in the labor market and suggesting that the economy will continue to struggle in coming months.
From the Bureau of Labor Statistics (BLS): The unemployment rate edged up to 9.8% in November, and non-farm payroll employment was little changed (+39,000). This figure includes retail hiring for the Holidays, underscoring just how terrible this number really is. The number of unemployed persons was 15.1 million in November.
The unexpected happened. Just as expected.
The economy had 1.3 million discouraged workers in November who gave up looking for work because they don’t think there are jobs available to them. There are two major categories of employment: U3 and U6. If you fall within one then you are not included in the other. U3 is the full-time unemployment level. The U-6 number is far more accurate and a broader measure of the unemployment rate, which includes people who stopped looking for work and those settling for part-time jobs (underemployed), which remains high at 17+%.
The U6 measure of unemployment is perhaps the most comprehensive measure of labor resource unemployment available. This is very significant. The “official” unemployment uses U3 data, which is totally misleading. If they used the same criteria they used during the Great Depression (when unemployment was 25%), and compared the same numbers today, the public would be told the truth – we are in a Depression. Non-government experts are estimating unemployment at 23%. In some pockets of the economy, local unemployment has hit 30%. That exceeds the unemployment levels of the Great Depression.
The economy added merely 39,000 jobs in November after adding 172,000 job gains in October. For perspective, if we add 39,000 jobs every month we will have those 15 million unemployed back to work in say, 385 months or only 32 years! And, the full 26 million back on the payroll would take a mere 667 months. If you’re wondering, at 172,000 jobs per month the 15 million unemployed will be back to work in 87 months (7 years) and the 26 million in 151 months (13 years). Of course the ‘utes will still be “students”.
- 39,000 jobs added in November (not good)
- 1.3 million discouraged workers in November who gave up looking for work
- Underemployed rate rose to 16.4% in November from 15.9% in October
- 276,000 additional unemployed month-over-month
- The number of unemployed persons was 15.1 million in November
- 42% of the 15.1M unemployed have been jobless for 27 weeks or longer
- Only 58.2% of adults are employed (the lowest during the current economic crisis)
- 10% of men are now unemployed
- Service jobs rose but construction & manufacturing jobs continued to fall
- Government employees rose
- Wages and hours worked flat (not good)
- Average weekly wages fell for Non-Executives
- Employed 25 to 54 year olds fell 400,000
- The unemployment rate for 25 to 54 year olds rose from 8.4% to 8.7%
- The 25 and under workforce ‘dropped’ 100K
- One year ago, the Non-Farm employment was OVERSTATED by 1.3 million according to today’s “final revision”
- For the last 7 Months Year-over-Year revisions have been in excess of 1 million jobs OVERSTATED
- The population rose 200K but workforce only rose 100K
Meanwhile, the average workweek for all employees was 34.3 hours in November, the same as in October. Employers normally increase the hours for their existing work force before hiring new people. Average hourly earnings of all employees increased by just 1 cent to $22.75. Higher income helps support consumer spending. Accounting for about 70% of demand in the U.S. economy, household consumption remains weak compared with previous recoveries.
Strip away the gimmicks and fictional seasonal adjustments, unemployment is around 19-20%. This current report would then indicate that we are still losing jobs at an alarming rate. Focusing on debt reduction at this time isn’t going to help unemployment. You cannot boost the economy by confiscating the money from the productive sectors of the economy and handing it out to the unproductive sectors.
Consumers are worried about losing their jobs and are having their incomes squeezed; consumer confidence is way down. That makes businesses anxious about investing. There is no doubt that the credit crunch has exacerbated a downturn in the housing market and the broader economy. The deteriorating economic outlook has undermined business confidence.
All this will not be fixed quickly or easily. Usually when unemployment is up, and demand is down, and an economy is in a recession, you get low inflation; sometimes even deflation. The only time in recent history when we had high unemployment, and high inflation, affectionately named stagflation, was under Jimmy Carter. That is what happens when you print money to stimulate the economy and there is no demand. Yet the next round of QE2 (printing money) shows that inflation has already started to kick in.
Higher energy prices will stop any recovery before it even gets going. Oil has jumped $10 dollars a barrel in the last 5 weeks DIRECTLY because of QE2! The Fed is pumping cash in and devaluing the dollar on a daily basis. We don’t produce anything anymore (except vitriol), agriculture is a myriad of laboratories, and pretty soon we will have household appliances that fix themselves, eliminating more jobs. With this Congress still trying to play politics it’s no wonder the unemployment numbers continue to go up. Businesses won’t hire if they don’t know what the taxes and health care costs will be for their business.
But when an economy has such widespread unemployment, the basic concept of taking money out of the private sector, especially small businesses, with increased taxes, to bring into the federal government is sheer lunacy. The economy will stay close to its current level through 2013 (not drop to less that 8% unemployed; U3 rate) and we will probably experience a jobless recovery through 2017. For now, we remain flatlined at 9.8% at U3 measures.
No one can say Team Obama doesn’t know how to ‘game’ bad news. We are in no way turning the corner. The Democrats have controlled Congress since the 2006 election.