The Bureau of Labor Statistics (BLS) February Employment Situation report came out on Friday, march 9th. While typical focus is usually on the number of jobs added and the unemployment rate, me being such a wonk decided to drill baby drill deeper into the numbers. Here is a non-economist’s assessment:
· 227,000 private sector jobs were added in February
· The unemployment rate remained at 8.3%. Six months ago, the rate was 9.1%
· There are 12.8million unemployed persons (relatively unchanged)
· Unemployment by key demographics (all showing little or no change)
o Adult men: 7.7%
o Adult women: 7.7%
o Teenagers: 23.8%
o Whites: 7.3%
o Blacks: 14.1%
o Hispanics: 10.7%
o Asians: 6.3%
· Unemployment by education
o Less than HS diploma: 12.9%
o HS Diploma, no college: 8.3%
o Some college or associates degree: 7.3%
o Bachelor’s degree and higher: 4.2%
The Troubling Data:
· 5.4million individuals have been unemployed for over 27 weeks (referred to as long term unemployed). That is 43% of the total unemployed. Duration of unemployment details:
o Less than five weeks: 2.5million
o 5 to 14 weeks: 2.8million
o 15-26 weeks: 2.0million
o 27 weeks and over: 5.4million
o The average duration of unemployment is 40 weeks and the median is 20.3 weeks.
· 2.6million individuals are unemployed and NOT included in the 12.8million number because they haven’t looked for work in four weeks.
· Of the 2.6million, 1million are called discouraged workers in that they have given up looking because they believe there are no jobs available.
· Over the last 12 months, while the unemployment rate for Gulf War II veterans has dropped from 12.5% to 7.4%, the real cause is the major drop in the participation rate from 81.6% to 69.2%
· Over the last 12 months, the number of people employed in Construction is down 215,000.
The Positive Data:
· There was good diversification in the job growth
o Professional and business services: added 82,000 jobs
o Healthcare and social assistance: added 61,000 jobs
o Leisure and hospitality: added 44,000 jobs
o Manufacturing: added 31,000 jobs
o Mining: added 4,000 jobs
o Construction: no change
o Government: no changes after shedding 22,000 jobs/month in 2011.
o Average workweek in manufacturing increased by 0.1 hr (up but not great)
o Average hourly earnings went up $.03 (up but not great)
· Participation rate has remained constant at ~64% over the last 12 months. Before the great recession it hovered around 66%.
· Unemployment rate from 2007 (ave) to February-2012 by education. You can see across the board that the recession has taken a tremendous toll with all education levels seeing ~2x the increase un unemployment levels
o Less than HS diploma: 7.1% to 12.9%
o HS Diploma, no college: 4.4% to 8.3%
o Some college or associates degree: 3.6% to 7.3%
o Bachelor’s degree and higher: 2.0% to 4.2%
· The good news is that the economy is adding jobs across a wide range of industries, with the exception of construction, an industry with a significant lower educated workforce. The lack of flexibility and mobility of this demographic group will make it difficult to find employment.
· Private job increases will continue throughout the year but unemployment will stay high as the 2.6million marginally attached persons will reenter the job seeking masses. Politically bad for the president, economically good for the country.
· It looks like public and government cuts seem to have leveled off as states have made the necessary cuts in 2011. In fact some states, like Arizona, are seeking to raise taxes to specifically channel additional funds to education and state services which could lead to increased employment.
· The bad news for the country is we have been going through a structural issue in our economy for over twenty years. Through a series of bubbles driven by defense spending, dot coms, and housing, we have covered up the fact that we have not offset the effects of globalization. This is why President Obama was so keen on creating green energy jobs as they represented Blue Ocean strategies. We will not compete against lower cost nations in existing markets and industries, we need to identify, innovate, and capture the new opportunities.
· In the short term we will stay at 7-8% for the next 2 years, welcome to the new unwelcome reality.