Saturday, January 7, 2012

15 Million Americans Jobless Over 2 years

Fox News reported last September that "America's 14 million unemployed aren't competing just with each other. They must also contend with 8.8 million other people not counted as unemployed -- ["discouraged workers"] and part-timers who want full-time work. Roughly 2.6 million people aren't counted as unemployed because they've stopped looking for work. Once they start looking again, they'll be classified as unemployed. And the unemployment rate could rise. Combined, the 14 million officially unemployed; the "underemployed" part-timers who want full-time work; and "discouraged" people who have stopped looking make up 16.2 percent of working-age Americans."

While I don't usually agree with Fox News, they (as opposed to the mainstream media) came closer than anyone else to getting this right; but while they say 2.6 million people aren't counted, I have calculated that over 8 million are no longer being counted.

And how do "discourage workers" leave the labor force when they supposedly “stop looking for work”? When their unemployment benefits expire? How does one "re-enter" the labor force if they are looking for a job, but not actually being hired? Or are they counted as part of the labor force only after they finally get lucky enough to find another job - - and after they sign a W-4 form which is sent to the Social Security Administration?

And when the government stops counting people, they say the labor force is smaller, and that we have a lower "participation rate".

The Bureau of Labor Statistics just reported that the United States added 200,000 new jobs last month, and that the nation’s unemployment rate fell to 8.5 percent in December. So I will suppose that 200,000 people "re-entered" the labor force and are being counted again. But how does the government know how many people are still "discouraged" and not looking for work?

We can assume that a percentage of those moved in with their parents, retired on a pension, went on disability, left the country, or passed away...and shouldn't be counted. But what about everybody else?

The Labor Department said Thursday that weekly applications for unemployment benefits dropped to 372,000 last week. That was 11 percent lower than the same time last year. But it's also being reported that another 50,000 Americans just mysteriously dropped out of the labor force again.

Government employment, which shed 280,000 positions over the past year, lost 12,000 in December. Much of the decline occurred this past fall.

Service firms, which employ roughly 90 percent of the work force, grew a little faster in December, according to the Institute for Supply Management.

The 11 non-manufacturing industries reporting growth in December: Retail Trade* (holiday hiring); Professional, Scientific & Technical Services; Finance & Insurance; Information; Construction; Other Services; Wholesale Trade; Public Administration; Educational Services; Mining; and Transportation & Warehousing.

(*Friday's Labor Department data showed the biggest job gains for transportation and warehousing, which benefited from seasonal hiring.)

The 7 industries reporting contraction in December — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Health Care & Social Assistance (budget cuts); Real Estate, Rental & Leasing; Accommodation & Food Services; Utilities; and Arts, Entertainment & Recreation.

The New York Times reports: "Congress may yet decline to continue extensions of the payroll tax break and unemployment benefits that have given families a lift and boosted spending. Money, in the form of loans, is still hard to come by. Home values continue to drop. And though the most recent numbers make it appear the United States is shrugging off the troubles in the euro zone, a severe slowdown there or, worse, a catastrophic financial collapse, is still a threat."

The Wall Street Journal reports: "The economy added 1.6 million jobs in 2011, bringing non-farm payrolls to about 131.9 million last month (a reduced workforce). That is roughly 6.1 million less than January 2008, before the recession started damaging the labor market. In total, the downturn and its aftermath wiped out about 8.8 million jobs."

Only 8.8 million jobs wiped out? But how can that be when just over two years ago (113 weeks ago) we had 15.7 million people unemployed in October of 2009 when the unemployment rate was 10.2%.

And even if all 3.2 million jobs that were created since that time were all filled by these same people, canceling out all those who were laid off since that time, shouldn't we still have about 15.7 million unemployed and a 10.2% unemployment rate?

The Huffington Post said yesterday that "1.9 million have been out of a job for 99 weeks or longer." (I left a comment) Wrong, wrong, wrong! The media keeps repeating the Bureau of Labor Statistics' myths!

Over two years ago (113 weeks ago) we had 15.7 million people unemployed in October of 2009 when the unemployment rate was 10.2%, and they have all exhausted their jobless benefits since that time (99 weeks max).

So, with only 3.2 million jobs created (and more layoffs since that time), there must be about 15.7 million Americans who have been out of work for 99 weeks or longer (not 1.9 million as the HuffPo reported). Remember, since then only 3.2 million jobs were created...and we also had another 6 million high school and college graduates since that time too. And they ALL couldn't have just "dropped out" of the labor force and moved in to their parent's basement. So where did 15 million jobless Americans go?

In the Huffington Post's newsletter yesterday they warn: "Stay away from Unemployment Rate Truthers -- people who claim to have the REAL unemployment rate. Here's an example."

This blogger read the article at and almost totally agrees with it. So after researching and living unemployment for the past 3 years, I too must also be an UNEMPLOYMENT RATE TRUTHER.

The only explanation I have is, the 1.9 million being reported as being out of work for 99 weeks is only because recently has the Bureau of Labor Statistics began keeping tracked of those who "dropped out of the labor force" and were at one time included in the U-6 rate as being "discouraged workers" and/or "marginally attached". (I wrote about the Bureau of Labor Statistics' flawed CPS household survey in an article listed below).

But most of the 15 million unemployed Americans from 2 years ago didn't go anywhere, they are just no longer being counted, and they were all swept under the statistical rug.

By the way, China aims to create 85 million new jobs and hold its unemployment rate down under 5 percent from 2011 to 2015. That's where our jobs are. In the decade preceding the financial collapse, we lost about 8 million jobs and 52,000 factories due to out-sourcing.

Meanwhile, profits are up for the "job creators" as corporate tax revenues continue to decline.

U.S. corporate profits regained their pre-crisis peak in early 2010, according to the Bureau of Economic Analysis. The latest, revised data released just before Christmas showed corporate profits before tax rose to a record $1.97 trillion in the third quarter of 2011.

Ed Yardeni, chief economist at Yardeni Research, says one big possible factor: companies are keeping more of their profits in overseas subsidiaries; they don't pay U.S. taxes on them until they are repatriated. As the U.S. recovery has sputtered, companies are likely seeing faster growth in overseas markets.

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  1. It only stands to reason that if 15.7 million Americans were unemployed 2 years ago, and only 3.2 million jobs were created since that time, then at the VERY LEAST there must still be 12.5 million who have been out of work for 99 weeks or more.


    "Younger workers are increasingly giving up hope of finding a job, in part because older workers are hanging on to their jobs longer than they had planned, as their retirement funds and home values are depleted."

    Under Obama, a Record Decline in Government Jobs - Despite what Republicans say, "the Obama administration has turned out to be anything but a 'big-government' one."

    "About a third of all jobs created in that period have been in relatively low-paying sectors...and temporary help services account for about 15 percent of all new jobs added...and 8.5 million are working part time because they cannot secure a full-time position."

    "State and local governments are continuing to adjust their government employee levels to actual revenues. No more artificially inflated payrolls due to deficit-financed federal stimulus....the still-low labor force participation rate, which remained unchanged at 64%. That is down .3% from a year ago. In 2007 when jobs were plentiful the labor force participation rate was 66%. The two percentage point decline is the equivalent of about three million fewer Americans working or looking for work."

  3. U.S. being used as a reason for cheaper wages elsewhere!

    "Trying to persuade locked-out workers in Canada to accept a sharp cut in pay, Caterpillar Inc. is citing lower wages elsewhere. But instead of pointing to the usual models of cheap and pliant labor, such as China or Mexico, it is using a more surprising example: the U.S."

    It's not necessarily over-regulation or high taxes, it's lower wages overseas that trumps the aforementioned. How can American workers compete when engineers in China are paid the same as McDonalds workers here in the United States? And how can anyone compete with robots? We can't.

  4. i don't think it's accurate to call the BLS's CPS "flawed." it may be valid to argue that their definition of "unemployed" is too limited and should be changed, but the unemployment rate from the CPS is still a useful statistic. it lets us see changes over time and relative rates for different periods for people who are actively seeking work. as far as i can see, that's all it's meant to do. discouraged and underemployed workers are not part of it, and those figures come from other data.

  5. See these links for charts and break down of jobs created and the "participation rate" of the work force.

  6. first, re the quote you put in a jan 7 update ["Younger workers are increasingly giving up hope of finding a job, in part because older workers are hanging on to their jobs longer than they had planned, as their retirement funds and home values are depleted."]:

    we'll see much more of that if retirement age gets raised to fix social security.

    2nd, i'm not sure participation rate is really unusually low. according to this graph [], the rate didn't get up to 64% before the early 1980s. it's been falling for men since the 1950s and rose for women till the late 1990s, when it began to level off. it's only been falling for women for a couple years.

    if there's a rise of delayed retirements, young people unable to find first jobs might stay in school longer and not get counted in the labor force, resulting in lower participation. but apparently the number of early retirements is growing [], which seems to contradict the quote.

    boomer demographics. i dunno....