Bureau of Labor Statistics released the latest jobs report, and the decline in employment is MUCH uglier than in past recessions.
The latest employment numbers for May released 4 June 2010:
- Nonfarm payrolls increased by 431,000 workers in May
- The economy has lost 0.6 million jobs over the last year, and
- 7.4 million jobs evaporated since the recession started in December 2007
- Ex-Census hiring, the economy only added 20,000 jobs in May
This disturbing graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost):
The dotted line excludes Census hiring. The two lines will rejoin later this year when those hired for the Census finish the project. While we still have a “rebound” (using the term very, very loosely) including Census hiring, we’re already flattening out on the dotted line. This is a shape not seen on other past recessions’ lines — suggesting that the employment decline is extremely deep and the recovery quite shallow.
For the current recession, ♦ employment peaked in December 2007, and ♦ this recession is by far the worst recession since WWII in percentage terms, and ♦ 2nd worst in terms of the unemployment rate (only the early ’80s recession with a peak of 10.8 percent was worse).
This is a very weak report. The decrease in the unemployment rate to 9.7% came solely as a result of a decline in the job search participation rate of the unemployed — and that is not good news:
Notice that the 1990 and 2001 recessions were followed by jobless recoveries (as shown by the wide and shallow black and brown lines, above) — and the eventual job recovery was gradual. In earlier recessions the recovery was somewhat similar and a little faster than the decline (somewhat symmetrical).
The dotted line shows the impact of Census hiring. In May, there were 564,000 temporary 2010 Census workers on the payroll. Starting in June, the number of Census workers will decline – and the two red lines will meet later this year.
This graph lays out the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories as provided by the BLS: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more:
What really makes the current period stand out is the number of people (and percent) that have been unemployed for 27 weeks or more (red line).
In the early ’80s, the 27 weeks or more unemployed peaked at 2.9 million or 2.6% of the civilian labor force.
In May 2010, there were a record 6.763 million people unemployed for 27 weeks or more, or a record 4.38% of the labor force — significantly higher than during earlier periods.
It does appear the number of long term unemployed is near a peak (the increases have slowed). But it is still very difficult for these people to find a job — and this is a very serious employment issue.
This graph shows the employment-population ratio — the ratio of employed Americans to the adult population:
The Employment-Population ratio decreased to 58.7% in May (from 58.8% in April), though it had been increasing after plunging since the start of the recession. So, today, we have about the same employment ratio level as in December 1983.
This new decline is disappointing, with the rate well below the 66% to 67% rate that was normal over the last 20 years.
- the unemployment rated decreased to 9.7%,
- the number of part time workers (for economic reasons) decreased, thus
- helping to push down U-6 to 16.6% (from 17.1%),
- hourly wages increased (slightly),
- as did the average hours worked increase slightly.
- the employment-population rate declining,
- the few payroll jobs created ex-Census, and
- a record number of workers unemployed for more than 26 weeks.
The number of long term unemployed is one of the major stories of this recession, especially since many of them are now losing their unemployment benefits.
The reason the unemployment rate declined for May to 9.7% was because people left the workforce and abandoned their search for employment — 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.