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Employment Data Show No Economic Growth
On November 2, 2012, the US Department of Labor issued its weekly employment report, the results of sampling households and establishments during the previous week. The household survey, reported that total non-farm employment increased by 171,000 during the month of October, which the Obama campaign and the media widely interpreted as an indication that the economy was growing. According to the BLS, the establishment survey employment series has a smaller margin of error than the household survey because of the difference in their sample sizes. An employment change of about 100,000 is statistically significant in the establishment survey, while the threshold for a statistically significant change in the household survey is about 400,000. The problem is that the media failed to report that in August, 2012, two month’s earlier, the increase was 192,000 and fell in September to 148,000. This does not mean that the data are unreliable, only that it is not convincing that there is growth.
The household survey shows that unemployment increased last month from 7.8 to 7.9 percent. It shows that 12.3 million are unemployed, that 23.7 percent of teenagers seeking work cannot find employment, that 14.3 percent of blacks and 10 percent of Hispanics seeking work are unemployed, but only 4.9 percent of Asians seeking work are unemployed. Is unemployment a cultural phenomenon?
The establishment survey shows that the average number of hours worked per week was 34.4 and that the average earnings per week was $96. Total nonfarm payroll employment increased by 171,000 in October. Employment growth has averaged 157,000 per month thus far in 2012, about the same as the average monthly gain of 153,000 in 2011.
What the data do show is that the economy is stagnating. They do not show that we are on the way to economic recovery. As the BLS employment report itself states, “Total nonfarm payroll employment increased by 171,000 in October. Employment growth averaged 157,000 per month thus far in 2012, about the same as the average monthly gain of 153,000 in 2011.
Manufacturing employment changed little in October. “On net, manufacturing employment has shown little change since April…Mining lost 9,000 jobs in October, with most of the decline occurring in support activities for mining. Since May of this year, employment in mining has decreased by 17,000.” The report goes on to say, “In October, average hourly earnings for all employees on private nonfarm payrolls edged down by 1 cent to $23.58. Over the past 12 months, average hourly earnings have risen by 1.6 percent. In October, average hourly earnings of private-sector production and nonsupervisory employees edged down by 1 cent to $19.79.”
“The number of persons employed part-time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 269,000 to 8.3 million in October, partially offsetting an increase of 582,000 in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.”
The report goes on to say there were 2.4 million individuals who were not in the labor force but wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
One day earlier than the employment report, the BLS published its weekly report on initial claims for unemployment compensation. The actual number of initial claims amounted to 339,750 during the week ending October 27, 345,226 during the week ending October 20, and 362,730 during the week ending October 13. Although I lack the data for the week ending October 6, a reasonable estimate for the October’s initial claims would be 1.4 million. About 1.4 million workers were laid off during the last two weeks of September and the first two in October. This is further evidence of little progress toward economic recovery.
There was little reason for the Obama folk to take the employment report as indicating we are on the road to recovery. The evidence of a stagnating economy appears incontrovertible.
Comment by Larry Walker, Jr., 11/6/2012:
"The evidence of a stagnating economy appears incontrovertible." Natural Born Conservative concurs!
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