The May 2012 BLS unemployment report is abysmal. Total nonfarm payroll jobs gained were only 69,000. April job gains were revised down, from 115,000 to only 77,000. March payrolls were also revised down, from 154,000 to 143,000. The below graph shows the monthly change in nonfarm payrolls employment.
May shows only 82,000 private sector jobs gained while government payrolls shrank another -13,000. In addition, 9,200 of those jobs were temporary.
America has one hell of a jobs deficit. The start of the great recession was declared by the NBER to be December 2007. The United States is now down -4.973 million jobs from December 2007, 4 years and 5 months ago.
The below graph is a running tally of how many official jobs are permanently lost, from the establishment survey, since the official start of this past recession. Increased population growth, implies the United States needs to create at least 10 million jobs or self-employment, using the population survey statistics. This estimate assume a 62.7% civilian non-institutional population to employment ratio, as it was in December 2007. This implies an additional 5 million jobs were needed over a 53 month time period beyond the ones already lost. This is just taking into account increased population against the payroll jobs gap, the actual number of jobs needed is much higher, in part because payrolls, CES, and population, CPS, are two separate data surveys from the BLS.
Another problem with the employment market is the gross number of part-time jobs generally. There is a huge number of people who need full-time jobs with benefits who can't get decent jobs. Those forced in part time jobs increased by 245 thousand. Of the 142.29 million employed as reported from the current population survey, there are still 8.1 million of the 27.5 million part-timers working low hours because they cannot get full time jobs. That's a hell of a lot of people stuck in part-time jobs who need full-time work.
The official unemployment rate ticked up a notch, from 8.1% to 8.2%.
U-6 is a broader measure of unemployment and includes the official unemployed, people stuck in part-time jobs and a subgroup not counted in the labor force but are available for work and looked in the last 12 months. Believe this or not, U-6 still leaves out some people wanting a job who are not considered part of the labor force. U-6 jumped up 0.3 percentage points to 14.8%.
The labor participation rate, increased 0.2 percentage points to 63.8%. If we go back to December 2007, the labor participation rate was 66%. The highest civilian labor participation rate was in January 2000, at 67.3%. What a low labor participation rate means is there are over 5.34 million people not be accounted for in the official unemployment rate, in other words counted as employed or unemployed, many who probably need a job and can't find one, in comparison to 2007. That's in addition to the official 12.72 million unemployed.
The employment to population ratio is now 58.6%, an increase of 0.2 percentage points from last month. In January 2008 the employment to population ratio was 62.9%. You have to go back to the severe recession of 1983, October to find such low ratios, but in the 1983 case, the low ratios were short lived. The low employment to population ratios clearly show people dropping out of the labor count as well. We can see this by the cliff dive employment to population ratio during 2008-2010. There is no way magically, suddenly, a huge increase of population volunteered to drop out of the labor force, turned 65 at once, or magically all went to school. These are mostly people plain out of a job. The cliff dive in employment to population ratio represents about 10.5 million people, which is around the same amount of jobs really needed to keep up with population growth calculated above. There is no way roughly an additional 5.5 million people more people retired or went off to school in the space of two years as amplified by the drop in labor participation rates for those between ages 25-54, the prime working years.
These numbers are important because the official unemployment rate is a ratio, a percentage during a limited time period to calculate the number of people actively looking for a job and counted. Many people are not counted in the official unemployment statistics. Truth is America has more potential workers and less jobs in this so called recovery than any other period past the Great Depression.
How did the U.S. only add 69,000 jobs yet the unemployment rate only ticked up a 10th of a percentage point? The BLS employment report is actually two separate surveys. The jobs number comes from the CES, or establishment survey where the unemployment ratios comes from a different survey, the CPS, otherwise known as the Household survey. The unemployment rate is a ratio of those officially unemployed to those officially counted as part of the labor force.
More people were considered part of the labor force in May. Those not in the labor force dropped by -461,000 while overall non-institutional population rose by 182,000. The civilian labor force increased by 642,000, whereas those officially unemployed increased by 220,000. Yet those officially employed also increased by 422,000. In other words, more people were reported as employed as they entered the labor force.
We'll have more details overviewing this month's unemployment report in later posts, including looking at labor participation rates by age bracket, duration of employment and ratios of people stuck in part-time jobs when they need full-time work.
For more information on how the BLS tabulates non-farm payroll jobs, see this article, Under the Hood of the Employment report.