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Friday, February 03, 2012

January Employment 2012

Update: Arggh - I'm reading some of the babble, and people are reporting the population adjustment effects as if they really happened in one month. Before pontificating, read the report, including the notes. That is all. End update.

I think I mentioned this last month, but every January the population basis is adjusted for the Household Survey.

This introduces discontinuities. These numbers honestly are not directly comparable to the previous month. Some of the basic ratios shouldn't be that affected. Those are labor participation rate, which at 63.7% is a new low and may well have been affected (last month was 64%), the emp/pop ratio, which at 58.5% did not change from November or December but should be affected, and the unemployment rate, which fell again to 8.3%. That may have been affected. Nonetheless, the previous January the rate was 9.1%, so you can't say that this isn't improving. Also there was steady improvement in the previous few months, so another fall would not be unexpected.

But instead of babbling on about the changes, here is the table listing the effect:

In the next two months it will all smooth out and the running totals will become comparable again.

There's a strong hint in these adjustments that retirements are having a pretty big effect. Many of those retirements are from public employment, and those retirees are far more likely to actually exit the workforce and be replaced by younger workers. We also have a growing number of small business owners who can qualify for Medicare and thus will shut down their businesses, so it's not quite as positive a net effect as it appears. If you don't have retirement medical benefits, and if you can continue to work, you will do so.

Turning to the Establishment Survey, and ignoring the headline number of 243+ jobs, some observations:
Overall this is a very favorable employment report in the details, but the broad theme is less favorable, because it really does look like drops in unemployment are contingent on exits. Well, with our demographics those exits will continue to rise, but fiscally it means that the employment/wage tax base doesn't improve. On a real basis, as I wrote recently, the wage tax basis is declining still. That's a genuine fiscal problem.

The number of discouraged workers reported increased from last January, rising from 993,000 to 1,059,000. Long term unemployment numbers are still excruciatingly high. It's very worrisome - that number barely drops, and probably contains a high proportion of older workers and those with some labor limitations.
Unemployed over 27 weeks:

\Full-time workers - you can make a good case that part-time employment will inevitably rise as older workers seek part-time employment, but what about younger workers that can't make a living, have no possibility of medical benefits from their job, and no hope of really improving matters? A lot of people think we have slackers galore, but you are going to see food stamp usage and so forth rising with labor stats like these:

I don't even want to think about Obamacare subsidies in 2014. The whole plan has to be reworked. There is not a chance in hell we can afford it.

2 broken links to images in this very interesting post - can you pls fix it? Thanks.
As you say, BLS adjustments are nothing new. They retroactively took into account the effects of the Census result. But when you look at the long term trend since the last Census based revision; it's clear that NFP growth has been grossly inadequate to support US population growth over the time period.
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