Saturday, May 03, 2014

Unemployment Report: Shizophrenia

This is a very schizophrenic jobs report. In the seasonally adjusted “official” data, the unemployment rate dropped an amazing four-tenths of a percent to 6.3% but this was accomplished completely by contraction in the labor force (-806,000) and employment actually fell slightly.

On the seasonally unadjusted side, the contraction in the labor force was of a similar magnitude (782,000). Employment grew by 677,000 but unemployment decreased by 1.458 million, again signaling a large scale exit or definition of workers out of the labor force. Signs of recovery among the unemployed were mostly absent. The number of workers confident enough of the job market to quit their job to look for a better or different one remained small, while those entering the labor force for the first time or rejoining it decreased.

Nevertheless, there were a few positive indications. The number of full time workers increased seasonally adjusted 412,000 and unadjusted 1.088 million.

My calculation of the BLS undercount, workers the BLS refuses to include in the labor force, is now at or higher than the number of the unemployed. That is the BLS is missing something like half of the unemployed in its measures.

In another schizophrenic turn, while the household survey is showing a shrinking labor market, the business survey is showing, at least on the surface, a red hot spring rebuild. Seasonally adjusted an increase of 288,000 jobs; unadjusted and even more impressive 1.152 million. But as usual, the jobs are mostly confined to low paying industries like retail, leisure and hospitality, and administrative and waste services. With improving weather, the seasonal construction sector also took off increasing by 212,000. Overall, the spring rebuild is similar in size to last year’s. On the other hand, hours and wages were stagnant, hardly what you would expect for a job market heating up (and at odds with the increases in full time work seen in the household report).

In essence, we have two contradictory reports. The household survey is fairly negative. Unemployment improved but only because the labor force shrank. This is not good news. The business survey is mixed, showing growth but in low paying sectors and with no significant growth in wages and hours.

The article is here:


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