by Bill McBride on 2/05/2010 11:16:00 AM
Friday, February 05, 2010
Unemployed over 26 Weeks
Click on graph for larger image in new window.
The blue line is the number of workers unemployed for 27 weeks or more. The red line is the same data as a percent of the civilian workforce.
According to the BLS, there are a record 6.31 million workers who have been unemployed for more than 26 weeks (and still want a job). This is a record 4.1% of the civilian workforce. (note: records started in 1948)
The number of long term unemployed is one of the key stories of this recession. Last year, David Leonhardt at the NY Times wrote an excellent piece about this: Wages Grow for Those With Jobs, New Figures Show
In the job market, at least, the recession’s pain has been unusually concentrated.Seasonal Adjustment
People who have lost their jobs are struggling terribly to find new ones. Since the downturn began in 2007, companies have been extremely reluctant to hire new workers, and few new companies have started. The economy and the job market are churning very slowly.
Try thinking of it this way: All of the unemployed people in the country are gathered in a huge gymnasium that’s been turned into a job search center. The fact that this recession is the worst in a generation means that there are many, many people in the gym. The fact that the economy is churning so slowly means that there is not much traffic into and out of the gym.
If you’re inside, you will have a hard time getting out. Yet if you’re lucky enough to be outside the gym, you will probably be able to stay there. The consequences of a job loss are terribly high, but — given that the unemployment rate is almost 10 percent — the odds of job loss are surprisingly low.
Back in November, Floyd Norris at the NY Times asked: Did Unemployment Really Rise?
The economic reactions over the weekend to Friday’s employment report all started from the assumption that things grew much worse in October. The unemployment rate leaped to 10.2 percent from 9.8 percent. Another 190,000 jobs vanished.Norris was referring to the "Not Seasonally Adjusted" (NSA) number. I suppose now Norris will ask "Did unemployment really fall?". The NSA number for unemployment was 10.6% in January - a sharp increase from December, as opposed to the 9.7% SA headline number.
Actually, none of that happened.
In reality, the government report says unemployment rates remained steady at 9.5 percent.
HOWEVER, as I pointed out when Norris wrote his article, there is a strong seasonal pattern to employment (and unemployment), and the Seasonally Adjusted number is the one to use. So if you see analysis featuring the NSA number (without pointing out the seasonal pattern to employment), just ignore it.
Earlier employment posts today: