What are recent labor market data telling us?

What are recent labor market data telling us?What are recent labor market data telling us?

Norm Cloutier, DirectorUW-Parkside Center for Economic EducationOctober 31, 2012

Trick or Treat?

Trick or Treat?

September 2012 September 2012 Labor Market ReportLabor Market Report

• Household Survey– Unemployment rate falls to 7.8%

• Lowest since President Obama took office

– Number employed increases by 873,000• Largest gain since January 2003

• Establishment Survey– Jobs increase by 114,000

• 23 consecutive months of jobs gains

The “Good”?The “Good”?• “…shows we continue to recover…”

– David Plouffe, Senior White House Advisor

• “…provides further evidence that the U.S. economy is continuing to heal…”

– Alan Krueger, White House Council of Economic Advisors

The “Bad”?The “Bad”?• “This is not what a real recovery looks

like.”– Mitt Romney, Republican candidate for President

• “…another disappointing reminder of the failure of the Obama Administration’s economic policies.”

– Dave Camp (R), Chair, House Ways and Means Committee

……and the truly and the truly UglyUgly..• “Unbelievable jobs numbers..these Chicago

guys will do anything..can’t debate so change number.”

– Jack Welch, former CEO General Electric

• “…pro-Obama propaganda…”– Laura Ingraham, Talk Radio Network

• “I don't think BLS cooked numbers. I think a bunch of Dems lied about getting jobs. That would have same effect.”

– Conn Carroll, writer Washington Examiner

At Fox News…At Fox News…

Measuring Measuring Labor Market PerformanceLabor Market Performance

• Household Survey– Current Population Survey of 60,000 hh regarding

labor market behavior in the “reference week.”

• Establishment Survey– Current Employment Statistics (CES) surveys

141,000 businesses and government agencies, 486,000 individual worksites.

Categorizing Categorizing Labor Market BehaviorLabor Market Behavior

• In the Labor Force (civilian, noninstitutionalized, ≥ 16 years-of-age)

– Employed: Worked in reference week.– Unemployed: Did not work in reference week, actively

sought employment in last 4 weeks, and was available to work.

• Not in the Labor Force: Did not work, did not look for work in the reference week, or was unable to work.– Marginally Attached: Want a job, looked in the last 12

months (but not last 4 weeks), are available.• Discouraged Workers: Not looking because of

economic conditions.

““The” Unemployment Rate: U3The” Unemployment Rate: U3September 2012

Headline Unemployment: U3Headline Unemployment: U3

Sept 2012 7.8%

Oct 200910.1%

Per

cen

tag

e

Labor Force Participation RateLabor Force Participation Rate

Aug 2012 63.6%

Mar 200167.2%

Per

cen

tag

e

The Amazing Disappearing WorkerThe Amazing Disappearing Worker

• Decades-long decline in male 25-54 LFP– 1970: 96.0% 2012: 88.5%

• Aging Boomers: “The Pig in the Python”– We may soon reach 10,000 new retirees per day

• Recession: – Discouraged Workers– Premature retirement

• Public policy: – Relaxed standards for disability

Male and Female Male and Female Labor Force Participation: 1948-2011Labor Force Participation: 1948-2011

Per

cen

tag

e

LFP rate of prime working age LFP rate of prime working age population peaked in 2000population peaked in 2000

Sept 2012 81.5%

% in

th

e la

bo

r fo

rce

LFP Rate of ≥ 65 has been LFP Rate of ≥ 65 has been increasing since 1985increasing since 1985

Sept 2012 18.6%

% in

th

e la

bo

r fo

rce

… … but there are soooo many more of but there are soooo many more of them: the “pig in the python” is agingthem: the “pig in the python” is aging

Sept 2012 + 196,000

Th

ou

san

ds

Increasing share of working age Increasing share of working age population is disabledpopulation is disabled

Aug 2012 5.4%

Alternative Measures of Alternative Measures of Unemployment: U5 and U6Unemployment: U5 and U6

Sept 20129.3%

Sept 201214.7%

Per

cen

tag

e

The “Chart of Doom”: The “Chart of Doom”: Job Loss as Percentage of Total Employment PeakJob Loss as Percentage of Total Employment Peak

Job TroughFeb 20108.76 mil jobs lost

Lost > 500,000 jobs/month, Oct `08 – Apr `09

28

― 1981 ― 1990 ― 2001 ― 2007

cum

ula

tive

% c

han

ge

in t

ota

l e

mp

loym

ent

4832

Job Loss as Percentage of Total Job Loss as Percentage of Total Employment PeakEmployment Peak

2007

cum

ula

tive

% c

han

ge

in t

ota

l e

mp

loym

ent

March 2010

Government Jobs Government Jobs During Employment During Employment ContractionContraction

1981

2007

2001

months since employment peak

cum

ula

tive

% c

han

ge

in g

ove

rnm

ent

emp

loym

en

t

1990

Government Jobs Government Jobs During Employment During Employment ExpansionExpansion

cum

ula

tive

% c

han

ge

in g

ove

rnm

ent

emp

loym

en

t si

nc

e tr

ou

gh

1981

1990

2001

2007

Private vs. Government Jobs During Employment Private vs. Government Jobs During Employment Expansion: 2001 vs. 2007 RecessionsExpansion: 2001 vs. 2007 Recessions

cum

ula

tive

% c

han

ge

in

emp

loym

ent

sin

ce

tro

ug

h

2001 Private

2001 Public

2007 Private

2007 Public

Co

ns

truc

tion

4%

Ma

nu

fac

turin

g 9

%

Tra

ns

po

rt & W

are

ho

us

e 3

%

??

? 1

1%

Le

isu

re 1

0%

FIR

E 6

%

W&

R T

rad

e 1

5%

Pro

f & B

us

Se

rv 1

3%

Go

ve

rnm

en

t 16

%

Lo

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l Pu

blic

Ed

uc

atio

n 6

%

Job growth by selected industries during Job growth by selected industries during contractioncontraction—expansion phases of the 2007 recession —expansion phases of the 2007 recession

*%= industry’s percentage of overall employment

Since March 2009 initial unemployment claims Since March 2009 initial unemployment claims have been declininghave been declining

… … the average length of unemployment the average length of unemployment seems to have stabilizedseems to have stabilized

Wee

ks

Unemployed ≥ 27 weeks Unemployed ≥ 27 weeks as % of total unemployedas % of total unemployed

Per

cen

tag

e

Improving conditions for job seekers?:Improving conditions for job seekers?:unemployed, job openings, and quitsunemployed, job openings, and quits

2.9*

1.1*

6.7*

1.4*

3.5*

tho

usa

nd

s

Date

*ratio unemployed to openings