It’s Still about the Jobs Stupid! Redux

Posted: August 7, 2009 | Author: | Filed under: Global Financial Crisis, U.S. Economy | Tags: , , , | 2 Comments

flickrThe upward momentum in the unemployment rate seems to have abated as last month’s figure shows a statistically insignificant decrease to 9.4%. The unemployment rate itself is not the best indicator of what’s going on in the labor markets, but the changes from month-to-month give us some indication of improvement. Reuters reports that payrolls fell less in July giving some indication that things are slowly improving. This is a good indication that we may be approaching the bottommost point of the recession. The upward momentum is slowing.

Employers shed 247,000 jobs in July, the Labor Department said Friday, the least in any one month since last August, taking the unemployment rate to 9.4 percent, down from 9.5 percent in June.

“It suggests the recession will be ending before the end of the year. There isn’t any part of the economy that hasn’t shown some slowing in deterioration,” said Joe Davis, chief economist at Vanguard in Valley Forge, Pennsylvania.

Whenever economists teach about the job markets, we always mention that the unemployment rate should never be looked at as the sole indicator employment trends. Indeed, we alread see some discussion on the finance/econ blogs that remind us that it’s the underlying flows of people in and out of the job market as well as the rate of job creation that give us a full sense of what’s going on.

Daniel Indiviglio at The Atlantic asks Did the Unemployment Rate Really Go Down? and discusses one of the biggest bones of contention in measuring the rate itself, the discouraged worker. Discouraged workers are those people that have been unemployed and looking for work for so long that they’ve given up the search. Once you give up the search for a job, you leave the ranks of the ‘unemployed’ and you no longer count in the unemployment rate. The number of these folks becomes significant once a recession goes on for some time.

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Job Markets Keep Getting Worse

Posted: March 6, 2009 | Author: | Filed under: Uncategorized | Tags: , , | 5 Comments

gr2009030601576651,000 jobs disappeared during the month of February according to the BLS.  This was the fourth month in a row with job losses over 600,000.   The unemployment rate is now at levels unseen since 1983.  We have an official unemployment rate of 8.1% but that belies a lot of stories including the number of people forced into part time jobs, the number of people so discouraged they have given up hope of finding a job, and the sectors and people who find themselves most vulnerable to this awful economy.  I’m not a labor economist and don’t do research in the area so I’m basically limited to what I know from teaching and attending my own basic economics classes.  The most important basic thing to know about labor markets is to dig in there into the break downs behind the unemployment rate for the full story.

Unemployment hits people differently.  That is why the major statistics are sliced and diced several different ways.  Age and ethnicity are frequent subcategories of interest.  Today’s unemployment statistics showed the usual story.

The unemployment rate continued to trend upward in February for adult men (8.1 percent), adult women (6.7 percent), whites (7.3 percent), blacks (13.4 percent), and Hispanics (10.9 percent). The jobless rate for teen-agers was little changed at 21.6 percent. The unemployment rate for Asians was 6.9 percent in February, not seasonally adjusted.

Asian unemployment is always the lowest followed by white unemployment.  The worst hit by unemployment are black teenage men whose unemployment rates can average about 30% even in the best of economies.  Do you know why women always manage to have lower unemployment rates than me?  Well, if you checked Heidi Li’s post on the wage gap, you have your answer.  Women are employed on the cheap and are much more likely to be kept on during a bad economy than their over paid male counterparts.   Older people generally fare better than younger.  That is just the last hired, first fired behavior of businesses trying to hold on to their loyal and most experienced employees.

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