Here is the link if you want to read it: http://www.bls.gov/news.release/empsit.toc.htm
A picky employer
Every news source has probably hashed and rehashed the stat of only a +80,000 gain in nonfarm, private payrolls and a unemployment rate of 8.2%. The number was disappointing because recoveries historically require consistent monthly gains of about +150,000. (The BLS estimates a 90% confidence interval of +/- 100,000 using their methodology, so a) +80,000 is not statistically significant using a 90% CI, and b) a real recovery would need consistent statistically significant gains... don't worry if that kinda flew by) As a refresher (and a reminder to be wary of government statistics!), the unemployment rate is calculated by U / (U+E), or the number of unemployed divided by the sum of the unemployed and employed. The employed number is fairly straightforward: if you worked, or were temporarily absent due to vacation, illness, or a strike, you're employed. But the catch is the unemployed number: you have to be not working AND able to work that time (not disabled) AND actively seeking a job. So everyone who has gone back to school or gave up searching for a job aren't even counted. As you might have guessed, that can make a huge difference.
What hits closer to home though, is something not as obvious in the report: the number of unemployed 20-24 year olds (again, this doesn't even count the ones who have gone back to school). In the report, we can count the number of unemployed aged 20+ in the labor force by sex (a total of 11.3M seasonally adjusted), and the number of unemployed aged 25+ in the labor force by education level (a total of 9.3M seasonally adjusted). By taking the difference and ignoring the possibility of people identifying as both sexes or neither, we can derive the number of unemployed between the ages of 20 and 24: 1.99M! I didn't crunch the numbers of past years, but according to Bloomberg news, this number has been rising steadily over the last 5 years. Not only are 2M of the most energetic cohort not working, the economy will be weakened in 15-20 years when we're expected to be the most productive workers in our prime.
What's being done about this? Not much I'm afraid. Our lovely presidential candidates are only focusing on healthcare or espousing Supply-Side economics (which has pretty much been laughed out of town in the econ world). Remember the American Jobs Act of 2011? Didn't think so. It was a collection of some good ideas with some bad ideas. Tax credits for employing long-term unemployed/students and infrastructure projects were good: incentives with very specific targets tend to work well, and many roads and bridges around the country are falling into disrepair. Many of the city of Chicago's water mains were laid between 1890-1920! That's a municipal and not a federal project, but I would bet on similar levels of neglect everywhere. The bill had some bad ideas: extending unemployment benefits and "protecting" jobs of teachers/police/firefighters. Did you know unemployment benefits have already been extended several times from the original 26-week period? Plus there have been studies showing strong correlations between long benefits and time between jobs, and between long benefits and eroded incentives. As for our teachers/police/firefighters, I value their roles in society as much as anybody, but it's their absurd pension plans that are never mentioned (that their powerful unions would never want to mention), which if reformed, would mean their jobs wouldn't need protecting in the first place... definitely a topic worthy of a future post since it includes arithmetic that probably isn't fully comprehended by the public. The bill also had legitimate concerns of how it would be funded. It wasn't thought out at all past "tax people earning more than $1 million." The only parts of the bill that were passed were a tweak to the tax code, and the JOBS Act, but sadly the JOBS Act isn't even working as intended.
As expected, doom and gloom from the dismal science. Good night!
*Edit: The JOBS Act article link has been changed. Not everybody might subscribe to the WSJ
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