It's Beyond Bad -- The New Job Numbers

Please indulge my somewhat wonkish post, but I wanted to pick up on Loco Foco's point about the jobs market. The post doesn't quite convey the seriousness of today's data. It's time to panic.

Today the U.S. Bureau of Labor Statistics released two sets of numbers: unemployment and jobs (more specifically, non-farm payroll employment). The unemployment rates come from a survey of households, and the jobs number comes from a survey of business establishments (more specifically, establishments subject to the unemployment insurance tax). While the unemployment rate normally gets all the attention, the jobs numbers arguably are more useful.

That said, both sets of numbers released today really suck.

As Loco notes, the national unemployment rate reached 6.7 percent in November. Yet the unemployment rate is a very misleading figure as it only measures people who are a) in the labor force, b) jobless and c) actively seeking work. A more revealing number is the underemployment rate, which measures people who are unemployed, marginally attached to the labor force or working part time because they can't find full-time work. In November, the underemployment rate equaled 12.5 percent. This measure is climbing due to the growing numbers of people who can't get more than part-time work.

Additionally, the unemployment rate only captures people who are in the labor force. If an unemployed person gives up looking for a job, they no longer meet the above definition and therefore aren't counted. Commonsense says that these people are jobless, but statistically they don't count. Last month, 420,000 people left the labor force and therefore weren't counted in the unemployment calculation. Despite that, unemployment still went up.

The jobs numbers weren't any prettier. The economy posted a net loss of 533,000 jobs in November -- the worst monthly number posted since 1974. And with the exception of health care, every major sector of the economy eliminated positions -- a lot of positions. Manufacturing, retail, professional services (including legal services), construction, finance are all shrinking. And anything related to housing or autos is in really bad shape.

Even more alarmingly, the government revised the numbers for September and October (that is a normal practice; today's numbers likely will be revised too). The original numbers were bad; the revised ones are worse. Over that three-month period, 1.3 million positions were eliminated. The last period of comparable jobs loss occurred in 1975. Moreover, the economy has eliminated 1.9 positions since January with two-thirds of losses having occurred since September 1.

Of course, for those who care, these numbers have serious implications for social equity. A crumbling economy has an especially serious impact on certain groups that traditionally are at a disadvantage in the labor market, especially African Americans and young people. The current downturn has taken a toll on both young workers and men (owing to the fact that many housing-related fields employ disproportionate numbers of males).

At its core, the employment problems captured today are the byproduct of the bursting of the nation's speculative housing bubble. These numbers also suggest that households will be unable to fuel the economic growth needed to break the recession, and as this post from James Galbraith argues, businesses and exports won't be able to do it either. The solution: Team Obama needs to get spending.

FYI ... Click on their names to read the opinions of Megnanimous' boys Jared Bernstein and Dean Baker about today's numbers.

FYI .. People interested in North Carolina issues can click here to read an analysis I recently did on the ill-health of the state's labor market. And the November numbers for NC will be released later this month.