Is Unemployment Really Improving?
Yes, yes, I know what the official stats are, but here's some of the reality behind them:
That thick green line is the number of employed persons from 25-54. This number usually doesn't move much in recessions. This number isn't being shrunk by retirements. This is a group of people that have to work and want to work, and it appears they can't get jobs.
Core employment (25-54) employment is not recovering, and it isn't because the population is shrinking, because that population hasn't shrunk - it has grown a bit.
What we are seeing is an utter nightmare for people, and many of them are young. They can't have children, buy houses or cars, etc, because they just can't find jobs. Not only is this awful for them, but it implies that recovery going forward will be terribly weak because this segment of the population is economically impaired.
I have been reading articles about how employment is improving, but I don't see it in the real figures. More older people are working, especially past 65, which masks what is happening to persons of core working age.
Digging down into the numbers makes this look pretty dire.
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You can really look at the graph of full-time workers and NOT see a problem? Still, I find the drop in employment levels in the core more disturbing, but full-time shows why the economy is growing so slowly.
I have always looked at the age-sliced data to predict certain things about the economy, and I think it is highly significant. Employment 55 and over is slowly increasing, which is to be expected due to demographics. A demographically-induced change is slow and continuous over time.
The drop in core employment is discontinuous and caused by the recession. The labor force has grown significantly over ten years, but we haven't even recovered the full-time employment to the level after the 2001 recession, much less this one. This is unique in post-WWII recessions.
It's also strongly linked to the speed of recovery and growth rates after the end of recessions, and these numbers explain why food stamp beneficiaries are so high, why social mobility is so low, and why our economy is stuck in the doldrums.
Changes in employment among the older are masking what's happening among the general population:
We're still not hiring at rates sufficient to really cut into this structural unemployment, because that is what it is:
There's no question that we have people returning to college - and taking out loans to do so - but it's because we have structural unemployment. When we don't have structural unemployment, people who work tend to keep working and study part-time for retraining/increased qualifications.
In any case, that group of people referenced in your link are 16-24 years old, and are excluded from the core employment level (25-54). You do have a lot of people in that core group returning to school (and in many cases, living off loans) because they can't find work at a living wage.
Core levels of employment are a much better predictor of economic growth capacity over the next year than anything else.
I'm not saying that the economy is not improving. Relatively, it is. But after digging through a ton of these series, I don't think we are seeing any real improvement in overall population-adjusted employment - and it worries me. Actually I am shocked.
JOLTS openings provide some hope:
But as yet they have only revived to the previous cycle low, when DOL state data showed employment accounts still dropping. This appears to be very real. Economists keep expecting unemployment rates to rise, because when the job market starts to improve in an area more people always get back into the market - and it appears that hasn't happened yet because the job market is not hugely improving.
Over this next year we may begin to make a dent in it - the rise in JOLTS, if continued, suggests so - but I think policy makers are being misled by not looking at detailed numbers. We have a big problem.
In 2009, the unemployment did not go down in December. In fact, it went down a month later - from 10% in Dec. '09 to 9.7% in Jan. '10.
So, no, unemployment doesn't always go down at Christmas time and it would be extremely shortsighted to assume there hasn't been growth since unemployment hit 10% three years ago last month.
Is it rapid? No. Is it good enough to create a true recovery? No. But there is progress and has been progress for a year now. Dec. '10's unemployment rate was 9.4%, yet economic growth wasn't near the level many had hoped for that moth.
Moreover, last December, we only added 103,000 jobs - or about 100,000 less than this time last year. Unemployment also dropped to 8.5%, or nearly an entire percentage point less than last year at this time.
So, no, Pres. Obama is not being disingenuous when he says unemployment is getting better - it is.
All you have to do is look at this graph:
'11 was the best year for jobs creation since '05 and hopefully it's a trend that carries over into 2012.
Are we out of the hole yet? Not by a long shot - but we're better today than we were a year ago and that progress is welcomed...even if still disappointing.
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Average duration of unemployment since 1940--almost never over 20 weeks until now
Percent job losses in post WWII recessions--the last three recoveries have been jobless. The most recent one is an ongoing disaster of huge proportions
