Unemployment Picture 2017

"What's going on with Unemployment and why can I get a straight answer?"

When the monthly unemployment figures are published by the Bureau of Labor Statistics on the first Friday of each month, I often hear this question. The New York Times provides one answer. CNBC provides another answer. Analysts and pundits of every size shape and color provide their own take. And the sad part is that they rarely agree on either the number or what it means.

Here’s why: All the news sources, - TV, cable, and written - are in the business of generating revenue by providing information. If this information is fairly predictable and mundane, their circulation goes down. However, if they provide a different twist, their circulation goes up. So the same number can be viewed as a gloomy statistic by one news outlet and a positive statistic by another. So what should you do?

GO TO THE SOURCE

That’s right, go get the Bureau of Labor Statistics Employment Report and examine it yourself. Is it hard to do this? Absolutely not! Go to the search engine on your computer and type in “Bureau of Labor Statistics Employment Situation” and hit enter. Voila! There it is. All 42 pages of it. The report for the current month. You probably will have multiple choices so pick the one with the PDF file. (Or just click on the link I provided below.)

Would you like to see the report from October 2009? (Worst month of the recession, the month that hit the “high water mark” for unemployment). Simple! You can even abbreviate. Just type in:

“bls employment situation October 2009”.

There it is.

I can hear you now: “42 pages? Are you out of your mind? I just want to find out what time it is. I don't need to know how to build a clock."

Okay, here’s s summery of the February 2017 BlS report for the month of January:

BLS U-3 Unemployment Rate (Official unemployment rate) 5.1%
BLS U-6 Unemployment and Underemployment Rate 10.2%

That answers all your questions, doesn’t it? Probably not. In fact, I can hear you now: “ Wait a minute! What the hell is this? One figure is double the other one. What’s the difference?” Good question. Let me repeat my previous admonition:

GO TO THE SOURCE

It’s really worth it. If you are in the workforce or plan to be, it’s foolish not to know what’s going on. Here are a few examples of key information you might find:

Overall unemployment rate: 5.1%
Unemployment rate: college graduates 2.5%
Unemployment rate: high school graduates 5.9%
Unemployment rate: less than a high school diploma 8.9%

Now, suppose you are a worker with a less than a high school education. You just found out that the unemployment rate for your peers is 8.9%. What does that mean to you? That you should just give up because you don't have a chance? Absolutely not! It means that you have to really go to work and build a story about why you would bring value to a particular employer. It's not easy but it's not supposed to be easy. If it were easy, anybody could do it. But if you are determined and willing to work, you can build a series of stories that will blow the employer right off her chair and lead to a job that will escape the less prepared.

You're right. Pouring through the BLS report is probably more work and has more detail than you would like to see. So there are a couple things you have to ask yourself:

Are you happy with the information you're getting from someone else or would you like to be able read the source information and make your own determination? It’s up to you.
Is improving your knowledge of the employment situation so that you can conduct a more professional and potentially rewarding job search worth a little extra effort?

Here’s the good news: it's not that hard! And more importantly, you'll begin to see a lot more detail and make more informed decisions about what's going on than you have in the past

To make it’s easier, here’s a link that will have the BLS report pop up in front of you on your computer.

https://www.bls.gov/news.release/pdf/empsit.pdf

Table A-15 will show the “U-3” and “U-6” categories that we discussed above.

Now for an explanation of the columns and rows:

Months:

Jan/07. Normalcy. A month before the recession began
Dec/07 The “Official” beginning month of the recession
June/09 The “Official” ending month of the recession
Oct/09 The “High Water” mark for unemployment.
Jan/17 Latest month for which unemployment figures are available

Note: please don’t ask me how Economists picked beginning or end months. They operate in their own little world and live by their solemn code: “Often wrong but never in doubt”. (Only kidding, economists)

Unemployment Rate (U-3) “Total unemployed, as a percent of the civilian work force. (Official Unemployment Rate)

Under-Employment rate (U-6). Total unemployed, plus all persons marginally attached to the labor force, plus total unemployed part-time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. My comment: This is essentially all unemployed plus those working part time because they are not able to find full time work

Long-term unemployed. These are people who have been out of work for 27 weeks or longer.

Long-term % of total unemployed. That percentage of the unemployed who have been out of work 27 weeks or longer.

Population. I think everyone can figure this one out.

Labor Force. Total number of people who are working or were actively looking for work.

Labor Force Participation Rate (LFPR). This is the percentage of the total population who are either working or actively looking for work.

Let’s take a look at chart above

There’s a lot of information here. Let’s discuss.

Good News

We really had some horrendous employment numbers from December 2007 through October 2009. I’m glad those days are behind us.
The employment figures from January 2017 are a vast improvement over those from the recession years. Actually, they are pretty close to pre-recession levels

Areas of Concern

The under-employment figure (U-6) in January 2017 is still a full percentage point above pre-recession period. Is that significant? You bet it is! That additional 1% represents 1.6 million people who are under-employed.
The long term unemployed as a % of total unemployment is still a very alarming 23.4%.

And and then there is the Labor Force Participation Rate (LFRP)

Okay, just what is this LFPR? This is the percentage of the civilian population that is considered to be part of the workforce. This includes all the people that are working plus those that are seeking work. Here's the important part: the people who voluntarily remove themselves from the workforce are not counted in the unemployment figures. Now, you're probably thinking to yourself “ So what? Is this a big deal?” No, it's not a big deal. It's a huge, colossal, gigantic deal! Since January 2007, the LFPR dropped from 65.9% to 62.9%. What that means is that 7.62 million people removed themselves from the workforce! Remember, these are people that are not working but are not counted as unemployed. If you think that sounds ridiculous, you'll get no argument from me. Think about the implications of this:

If you added these people -that are all unemployed- back into the equation, here are the statistics that we would be talking about:
- The unemployment rate would be 9.17%
- The underemployment rate would be 13.4%
- In light of these statistics, the employment situation is far less rosy then it is usually painted.
- There is some good news in this figure for job hunters: when 7.62 million people voluntary remove themselves from the workforce, there is far less competition for you as a job hunter
- The bad news: as the economy continues to improve, historically many of these people will return to the job search.

This is understandably a lot to digest. If you'd like even more information, you can look at an analysis I did of the situation back in September 2014 when the picture was far less rosy. To look at this just click below:

Unemployment Sept. 2014