Friday, July 02, 2010

Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks

by Bill McBride on 7/02/2010 09:53:00 AM

Here are a few more graphs based on the employment report ...

Percent Job Losses During Recessions, aligned at Bottom

Percent Job Losses During RecessionsClick on graph for larger image.

This graph shows the job losses from the start of the employment recession, in percentage terms - but this time aligned at the bottom of the recession.

The current recession bounced along the bottom for a few months - so the choice of bottom is a little arbitrary (plus or minus a month or two).

The dotted line shows the impact of Census hiring. In June, there were 339,000 temporary 2010 Census workers on the payroll. The number of Census workers will continue to decline - and the gap between the solid and dashed red lines will be mostly closed in three or four months.

Employment-Population Ratio

The Employment-Population ratio decreased to 58.5% in June from 58.7% in May. This had been increasing after plunging since the start of the recession, and the recovery in the Employment-Population ratio was considered a good sign - but the ratio has now decreased for two consecutive months.

Employment Population Ratio This graph shows the employment-population ratio; this is the ratio of employed Americans to the adult population.

Note: the graph doesn't start at zero to better show the change.

The Labor Force Participation Rate decreased to 64.7% from 65.0% in May. This is the percentage of the working age population in the labor force. This decline is very disappointing, and the rate is well below the 66% to 67% rate that was normal over the last 20 years.

The reason the unemployment rate declined was because people left the workforce - and that is not good news. As the employment picture improves, people will return to the labor force, and that will put upward pressure on the unemployment rate.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

The number of persons employed part time for economic reasons (some times referred to as involuntary part-time workers), at 8.6 million, was little changed over the month but was down by 525,000 over the past 2 months. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) was at 8.63 million in June. This slight decline was a little bit of good news.

The all time record of 9.24 million was set in October.

These workers are included in the alternate measure of labor underutilization (U-6) that was at 16.5% in June.

Unemployed over 26 Weeks

Unemployed Over 26 Weeks 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 6.751 million workers who have been unemployed for more than 26 weeks and still want a job. This is a record 4.39% of the civilian workforce. (note: records started in 1948). It does appear the increases are slowing ... perhaps because people are giving up.

Summary

The underlying details of the employment report were mixed. The positives: the economy added 100 thousand payroll jobs ex-Census (still weak but better than in May), the unemployment rate decreased to 9.5%, the number of part time workers (for economic reasons) decreased slightly helping to push down U-6 to 16.5% (from 16.6%).

Negatives include the declines in the participation rate and employment-population rate, the slight decrease in hourly wages, the decline in average hours worked, and a record percent of workers unemployed for more than 26 weeks. The number of long term unemployed is one of the key stories of this recession, especially since many of them are now losing their unemployment benefits.

Overall this was a weak report.

Earlier employment post today:
  • June Employment Report: 100K Jobs ex-Census, 9.5% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.