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Wednesday, August 6, 2014

Since Recession Ended, 11 Million more not in Work Force

All the jobs that were lost during the Great Recession weren't all recently recovered as the media and the politicians claim. All the job gains that occurred since the recession had ended were mostly new jobs to accommodate about 50% of all new entrants into the labor force (high school and college graduates), while the other 8.7 million original jobs lost during the recession were lost forever -- and those jobs represent the huge uptick of those unemployed who are no longer counted as part of the labor force since the recession ended. (L.A. Times: Economy has Recovered 8.7 Million Jobs Lost in the Great Recession)

* According to the Bureau of Labor Statistics, we have 11 million more working-age adults today who are COUNTED as "Not in Labor Force" than we did when the recession ended in June 2009 --- AND ---- we also have 9.5 million working-age adults that are COUNTED as unemployed because they are still COUNTED as part of the labor force. (This is AT THE VERY LEAST 20.5 million people out of work who would prefer a job.)

From June 2009 (when the Great Recession "officially" ended) to June 2014 (the past 5 years)

In June 2014 the L.A. Times (and others in the media, government politicians and statisticians) reported all 8.7 million jobs that were lost during the Great Recession were recovered.

But if 8.7 million jobs were lost during the recession (which "officially" ended in June 2009), and 6.8 million working Americans have since left the labor force to go on Social Security as retired or disabled (noted below), while 15.7 million young people were graduating from high school (also noted below), how many total net new jobs were needed to replace all those that left the labor force to go on Social Security and for new potential entrants into the labor force from June 2009 to June 2014?

High School Graduates

Since the Great Recession "officially" ended (June 2009), we had a total of 15,740,945 high school graduates from June 2009 to June 2014 (over the last 6 school years).
Source: The National Center for Education Statistics

Class of 2008–09 --> 3,039,015
Class of 2009–10 --> 3,068,550
Class of 2010–11 --> 3,103,540
Class of 2011–12 --> 3,100,510
Class of 2012–13 --> 3,092,290
Class of 2013–14 --> 3,037,040

Retired and Disabled

From June 2009 to June 2014 (over the last 5 years) we had a total of 6,849,393 who left the labor force to go on Social Security.
Source: Social Security Administration

As of June 2009 we had 33,026,550 retired workers on Social Security and 7,593,308 on Social Security disability.
As of June 2014 we had 38,515,241 retired workers on Social Security and 8,954,010 on Social Security disability.
From June 2009 to June 2014 we had a NET gain of 5,488,691 retired workers on Social Security.
From June 2009 to June 2014 we had a NET gain of 1,360,702 disabled workers on Social Security.

Total NOT in the Labor Force

Data from the Bureau of Labor Statistics shows we have 11,083,000 more working-age adults that are counted as "Not in Labor Force" since the recession ended in June 2009 (over the last 5 years).

Not in Labor Force (June 2009 to June 2014)

June 2009: 79,734,000 Not in Labor Force
June 2014: 90,817,000 Not in Labor Force (NOTE: It was 92,594,000 in April 2014 --- a difference of 1,777,000 --- where did they go?)
Net Gain: 11,083,000 more workers are counted as "Not in Labor Force" since the recession ended in June 2009.

Job Creation (June 2009 to June 2014)

The table below was generated from the Bureau of Labor Statistics and shows a net gain of 9,425,000 new jobs created since the recession ended in June 2009 to June 2014.

       9.4 million jobs gained from June 2009 to June 2014
      -8.7 million jobs lost from December 2007 to June 2009 (Center of Budget and Policy Priorities)
=        700,000 net jobs gained
+   15,740,945 high school graduates (Assume that for every high school student going on to college, we have a college graduate attempting to enter the labor market).
=   15,040,945
-      6,849,393 those who left the labor force to go on Social Security (retirees and disabled)
=     8,191,552
-      7,870,472 assuming 50% of high school and college graduates choose not to look for work (like, maybe they married into money or inherited money.)
=        321,080

Net new jobs (only 18,000) were first added in January of 2010 according to the table below from the Bureau of Labor Statistics. (Also note that the unemployment rate didn't peak until October 2009 when it was first reported at 10.2% -- but it has since been revised down to 10% by the Bureau of Labor Statistics -- when 15.9 million American workers were reported unemployed.)

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2007 238 88 188 78 144 71 -33 -16 85 82 118 97
2008 15 -86 -80 -214 -182 -172 -210 -259 -452 -474 -765 -697
2009 -798 -701 -826 -684 -354 -467 -327 -216 -227 -198 -6 -283
2010 18 -50 156 251 516 -122 -61 -42 -57 241 137 71
2011 70 168 212 322 102 217 106 122 221 183 164 196
2012 360 226 243 96 110 88 160 150 161 225 203 214
2013 197 280 141 203 199 201 149 202 164 237 274 84
2014 144 222 203 304 224(P) 288(P)






P : preliminary

SUMMARY: Assuming 8.7 million jobs were lost as of June 2009 (since December 2007) MINUS 6.8 million who went on Social Security since the recession needed (June 2009) -- that would EQUAL a difference of 1.9 million net new jobs needed to fill the void --- PLUS 7.8 million additional new jobs for all the new entrants into the labor force (assuming ONLY HALF of high school grads since June 2009 had attempted to enter the labor force). This would EQUAL 9.7 million NET NEW jobs that were needed just to break even, but only 9.4  million were created, leaving us with a deficit of only a mere 300,000+ jobs. That sounds great but...

But wait, that can't be right either, because we also have 11 million more working-age adults who are COUNTED as "Not in Labor Force" since the recession ended in June 2009 --- AND we still have 9.5 million working-age adults still COUNTED as unemployed because they are still COUNTED as part of the labor force --- for a difference of 20.5 million who are not working (but should be) since June 2009. And that's assuming that only 50% of all graduates are looking for a job. 

If all graduates since the recession ended wanted a job (15 million), and the ones who are still counted as unemployed and still a part of the labor force (9.5 million) also wanted a job, we would need AT LEAST 24.5 million new jobs today -- not counting another 4.2 million not in the labor force since June 2009 (11 million MINUS 6.8 million who went on Social Security). That would mean AT LEAST 28.7 million net new jobs would be needed (today) to bring us back to the real unemployment rate of December 2007.

But on July 21, 2014 the New York Times reported A Drop in the Long-Term Unemployed. I ask: How can that be? It can't. The long-term unemployed are incrementally no longer being counted, and are being added to the tally of "Not in the Labor Force" --- but now, even that number is being manipulated to hide the true number of Americans who are unemployed, but want and need a job.

To put it in more simpler terms (and using round numbers), if we have consistently had 9 million people counted as "unemployed" every single month for the past 5 years, and we had 9 million jobs created during that period time (and no one graduated from school or attempted to enter the labor force, and nobody retired or went on disability, and nobody was laid-off, quit or fired), shouldn't we have ZERO unemployed, and a 0% unemployment rate, an NO uptick at all in the number of people not in the labor force, or any change at all in the labor force participation rate or the employment-population ratio?

2 comments:

  1. ok, bud, a few nits to pick...first, high school graduates are not a good proxy for youth entering the labor force; the national high school graduation rate did not surpass 80 percent until 2012; it was 74.7 percent for the class of 2010...similarly, those on social security isn't a good proxy for the number retired; ie, i'm "retired" but not on it; a lot of government workers arent on it either because they have separate systems (FERS, CSRS)...then, your total jobs created comes from the survey of employers (aka the establishment survey...all the labor force data comes from the household survey...the two surveys dont cover the same population; the establishment survey just covers those who are payrolls, and says nothing about the unemployed.. the household survey covers the entire population over 16, including the self employed and farm workers...

    so, while i agree with your premise, that a lot of workers are missing and unaccounted for, i can't say that your method shows that...i'll also admit that i wouldn't know a better way, ether...

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    1. Thanks...I just want to clarify:

      For example: When I say the "Class of 2008–09 --> 3,039,015" -- that means the number of graduates, not the number of seniors in that class year, so the percent should be irrelevant. But if only 80% of high schools students are graduating, that means we have many more "missing workers" -- unless they're all in prison.

      And while you might be retired, but not collecting a Social Security check, the vast number of Americans who DO retire DO collect one. My main point was just to show that over 11 million more people were not in the labor force since June 2009.

      Thanks for your comment.

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