6.3 Million Unemployed not Counted in "Jobs Recovery"

For almost every month from September 2009 to April 2010, the U.S. has had over 15 million people counted as "unemployed". Today the government reports only 9.6 million (and says the economy is in a slow recovery) — but that doesn't include another 6.3 million unemployed working-aged Americans who are no longer counted as "unemployed", but also want a job — because they stopped looking for work and are no longer considered a part of the labor force — and so, are not counted among the unemployed.

Add those 6.3 million people and there are still 15.9 million people in the U.S. who are out of work — more than was ever previously reported in 2009/2010 as unemployed. The CES survey that's conducted by the Bureau of Labor Statistics has been incrementally sweeping “discouraged workers” under the carpet every month (for years) — and have relegated these unfortunate souls to the “not in the labor force” heap.)

Einstein and Insanity: Doing the same thing over and over again and expecting different results — like looking for a job. That's why we have so many "discouraged workers" — people wasting their time and limited resources looking for non-existent jobs. The labor market is so over-saturated with so many people out of work that demand for goods and services is down – hence, secular stagnation. And that’s also why we have a declining labor force — because of a lack of jobs, and not because older people prefer shuffling off into early retirements; or because millions of "lazy slackers" choose to go on the government dole. (If you ever hear anyone arguing about unemployment without also mentioning a lack of available jobs, it's usually politically and/or ideologically motivated. And that goes for many of our esteemed economists as well.)

There's been a lot of discussion lately (in wonkish economic circles) about the "Beveridge curve" — a graphical representation of the relationship between unemployment and the job vacancy rate (the number of unfilled jobs expressed as a proportion of the labor force). Mark Thoma (a noted economist that I personally admire) has posted another informative link at his website: Peter Diamond: The Beveridge Curve. Click through the link to see a video of Diamond's lecture and read the reader's comments too. About 22 minutes into this video he mentions those who are "not in the labor force". (Peter Diamond won the Nobel Prize in economics and was nominated by President Obama to serve on the board of the Federal Reserve — but Republican senators blocked his nomination.)

The U.S. Bureau of Labor Statistics (BLS) provides us with a lot of data in their JOLTS reports (Job Openings and Labor Turnover Survey). Their latest report (August 12, 2014) says the U.S. has 4.3 million job openings — and that "over the 12 months ending in June 2014, hires totaled 55.7 million and separations totaled 53.3 million, yielding a net employment gain of 2.4 million. These figures include workers who may have been hired and separated more than once during the year." (Just like many TEMP workers we know, who think this is the "new norm".) Separations are defined as people who quit, get laid off or are fired — and this contributes to the "churn" in the labor market.

Some economists explain this lack of churn in the job market (and our "slack" in the labor market) as because older people aren't leaving the work force to make room for new entrants (like high school graduates). While others say that older people who are retiring make up HALF of the decline in the labor force participation rate. Actually, it's a little of each — but it's mostly for a lack of jobs that the labor force participation rate has been in a long decline since April 2000. But either way, the Baby Boomers are: "Damned if they do and damned if they don't".

• Don’t Blame Boomers For Unemployed Workers Leaving The Labor Force
• Don't Blame "Boomers" For Not Retiring
• Latest Wrinkle In The Jobs Debate: Blame The Boomers
• Don’t Blame Baby Boomers for the Shrinking Labor Pool
• Fed Up with the Fed Blaming Boomers
• White House: "Boomers Reason for Declining Work Force"
• Falsely Blaming Baby Boomers for Smaller Labor Force
• Wall Street Journal Blames Boomers for Declining Labor Force

But based on the 9.6 million Americans currently counted as "unemployed", the Bureau of Labor Statistics claims there are 2.2 people "unemployed" for every job opening. But the BLS and the "Beveridge curve" doesn't include those "not in the labor force, but want a job now". The St. Louis Fed currently reports 6.3 million unemployed working-aged Americans who are not counted as "unemployed", but also want a job (chart below).

Now add those two statistics together and there are still 15.9 million people in the U.S. who are out of work with only 4.3 million job openings — that is one job for every 3.7 unemployed — and that's assuming all those job opening are real, and not scams or data collection ploys, or under-worked HR people trying to stay busy, or companies looking for a tax writeoff for "help wanted" advertising, or companies looking to replace employees with lower wages (but with greater demands). The list is endless (such as companies complaining that they can't find skilled workers and want more guestworker visas to further depress an already stagnant wage market).

If they were counted as "unemployed" (which they are),
we'd have RECORD HIGH unemployment today.

SOME BASIC FACTS TO CONSIDER (Stats for June 2009 to August 2014):

1) From June 2009 to August 2014, the U.S. has had an additional 11.2 million people "not in the labor force", but not counted as "unemployed". (A chart further below shows 11.4 million "not in the labor force".)
* Source: Bureau of Labor Statistics - http://www.bls.gov/webapps/legacy/cpsatab16.htm

2) As of August 2014, we currently have 9.6 million counted as "unemployed", but also still counted as part of the labor force.
* Source: Bureau of Labor Statistics - http://www.bls.gov/news.release/empsit.nr0.htm

3) The U.S. had 9.7 million net new jobs created from June 2009 to August 2014.
* Source: Bureau of Labor Statistics - http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth

4) From the end of June 2009 to the end of August 2014 (62 months) the U.S. had a monthly average of 12.8 million workers unemployed (See the first chart further below)
* Source: Bureau of Labor Statistics - http://www.bls.gov/webapps/legacy/cpsatab1.htm

5) From June 2009 to August 2014 the U.S. has had an additional 7.02 million workers in payment status for Social Security retirement and disability (They are counted as "not in the labor force".)
* Source: Social Security Administration - http://www.ssa.gov/oact/ProgData/icp.html

6) Since the Great Recession "officially" ended, from June 2009 to August 2014 (during six school years), we had a total of 15.7 million new high school graduates (not counting dropouts.) College students, who choose not to work, are also counted as "not in the labor force". (NOTE: We assume for every high school grad who goes on to college, we also have another college grad (or a college dropout) exiting school to enter the job market, canceling out one high school statistic.)
* Source: The National Center for Education Statistics - http://nces.ed.gov/programs/projections/projections2021/tables/table_13.asp?referrer=list 

7) From 2008 to the end of 2013, almost 24 million long-term unemployed Americans were out of work at least 6 months and received extended unemployment benefits during that time.
* Source: The White House - http://www.whitehouse.gov/sites/default/files/docs/uireport-2013-12-4.pdf

NOTES OF INTEREST -- NUMBERS TO BE RECONCILED BY SOME EXPLANATION...

• As of June 2009 the U.S. had 14.7 million counted as unemployed and 80.9 million not in the labor force. (TOTAL: 95.6 million)
• As of August 2014 the U.S. had 9.6 million unemployed and 92.3 million not in the labor force. (TOTAL: 101.9 million, for a difference of 6.3 million.)
• Since June 2009 to August 2014 we have had an additional 11.4 million more working-age people not in the labor force (and also a difference of 5.1 million less people counted as unemployed).
• Of the 11.4 million not in the labor force, we subtract retired workers (many who were forced to retire early because they couldn't find work) and the disabled workers, and that equals the balance of 4.38 million workers not in the labor force who may also be disabled workers (also unemployed, but NOT in payment status for benefits) who applied for Social Security benefits — but were ultimately denied; discouraged workers who said they "dropped out of the work force" because they couldn't find work; voluntary non-working college students, voluntary stay-at-home parents and other voluntary non-participants in the labor force.
• Here's the Cleveland Fed in a recent post about the "Beveridge curve", but it gives no significance to those NOT IN THE LABOR FORCE.

CONCLUSION: When physical human labor in the U.S. eventually becomes mostly obsolete (maybe because of robotics or more offshoring), everyone in the work force could hold a Ph.D and there still wouldn’t be enough jobs for everybody (so here’s no “skills gap” either). That’s why a Basic Income will eventually be needed. But in the mean time, we might be better off with direct cash transfers vs. quantitative easing.

The charts below are from June 2009 to August 2014 for the number of Americans (16 and older) who are NOT IN THE LABOR FORCE and for the number of workers who are still counted as UNEMPLOYED.

-	Shaded areas in the charts below denotes the months during the Great Recession. Because unemployment is considered a "lagging indicator" in the economy, most of the highest unemployment occurred AFTER the Great Recession "officially" ended.

Series Id: LNS13000000
Seasonally Adjusted
Labor force status: Unemployed
Type of data: Number in thousands

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2007	7116	6927	6731	6850	6766	6979	7149	7067	7170	7237	7240	7645
2008	7685	7497	7822	7637	8395	8575	8937	9438	9494	10074	10538	11286
2009	12058	12898	13426	13853	14499	14707	14601	14814	15009	15352	15219	15098
2010	14953	15121	15212	15333	14858	14483	14527	14660	14578	14520	15097	14373
2011	13910	13858	13748	13944	13873	13971	13785	13820	13905	13604	13326	13090
2012	12650	12883	12732	12603	12689	12702	12698	12464	12070	12138	12045	12273
2013	12315	12047	11706	11683	11690	11747	11408	11256	11203	11140	10841	10351
2014	10236	10459	10486	9753	9799	9474	9671	9591	-	-	-	-

Series Id: LNS15000000
Seasonally Adjusted
Labor force status: Not in labor force
Type of data: Number in thousands

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2007	77506	77851	77982	78818	78810	78671	78904	79461	79047	79532	79105	79238
2008	78554	79156	79087	79429	79102	79314	79395	79466	79790	79736	80189	80380
2009	80529	80374	80953	80762	80705	80938	81367	81780	82495	82766	82865	83813
2010	83428	83279	83195	82687	83394	84060	84184	84013	84351	84899	84588	85250
2011	85506	85571	85597	85580	85787	86110	86362	86147	86012	86330	86368	86658
2012	87942	87610	87793	88218	88019	88022	88384	88897	88754	88476	88895	88865
2013	88963	89317	89896	89815	89754	89730	90062	90524	90695	91756	91283	91808
2014	91455	91361	91030	92018	92009	92120	92001	92269	-	-	-	-

* Source for both charts: Bureau of Labor Statistics - http://www.bls.gov/webapps/legacy/cpsatab1.htm