Turning Point: Unemployment is Receding

We're right about everything (4.00 / 1)

I'd like to think the economy is turning. The chatter I hear points that way.

But, it must be said, there might be fewer job losses simply because there are fewer jobs to lose. Take a big retailer like Barnes & Noble -- if they aren't closing stores, their employment will be steady. But they probably are running a minimal staff.

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by: JimC @ Fri Dec 04, 2009 at 19:33:18 PM CST

Maybe, but overall unemployment is actually lower too. (0.00 / 0)

Granted, that doesn't include the underemployed and those who have given up on looking, but the overall--not just the rise--has begun to turn around.

11,000 is not a net figure.

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@DougLindner

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by: Douglas E. Lindner @ Fri Dec 04, 2009 at 20:51:15 PM CST

[ Parent ]

one thing I'm confused about (0.00 / 0)

is how there can be a net loss of jobs of 11,000 and the unemployment rate can go down.  I'm guessing it has something to do with how they calculate the rate, but I'm not familiar with the factors or people they look at.  This sounds like my son getting a 90% on his test, then taking the same test again later and getting more questions wrong, but his grade improves to a 92%.  What am I missing here!?!!

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by: Timmy J @ Fri Dec 04, 2009 at 23:31:44 PM CST

[ Parent ]

Measurement. (4.00 / 1)

I don't have a source handy but my understanding is that 11,000 is the number of jobs eliminated and does not factor in jobs created, people who were fired to be replaced, etc.  The rate of unemployment is what percent of the workforce doesn't have a job, counting those who are actively looking for and don't have one.

Basically, 11,000 is not a net figure, the rate of unemployment is a net figure and likely means that significantly more than 11,000 jobs were created.

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@DougLindner

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by: Douglas E. Lindner @ Sat Dec 05, 2009 at 00:26:21 AM CST

[ Parent ]

Thanks! (4.00 / 1)

For some reason late last night/early this morning I read your previous comment to say, "11,000 is a net figure."  My mistake - and thanks for the correction/info!

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by: Timmy J @ Sat Dec 05, 2009 at 09:49:04 AM CST

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11,000 is the net figure, actually (4.00 / 1)

this takes into account the number of folks who lost their job and the number of people who found jobs.

It is possble that you can have net losses and still see the unemployment rate go down because the unemployment rate is based on both the number who are looking for work and the number who have jobs. The figure is also seasonally adjusted.

Here's is a link that explains the details:

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by: Michael Marsh @ Sat Dec 05, 2009 at 16:21:54 PM CST

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Looking at your link, (0.00 / 0)

It appears jobs were lost in some places and gained in others.  Obviously, those gains are not the same people who lost their jobs; does that mean the people who now have those "gained" jobs weren't previously counted as unemployed, and that's why the rate decreased?

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@DougLindner

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by: Douglas E. Lindner @ Sat Dec 05, 2009 at 16:34:22 PM CST

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No, it doesn't (0.00 / 0)

The BLS doesn't say it specifically, but my guess is most of the people who found jobs were moving from the unemployed group to the employed group.

A little background- the BLS puts people in the civilian economy 3 categories- employed, not employed, and not in labor force. This last group includes retirees, students, people on disability, those who are too discouraged to work, etc.

If you look at the raw employment data for November, the number of employed increased by 227K in the month, the number of unemployed went down by 325,000, and the number who are no longer in the labor force went up by 291,000. (This last number is ignored in calculating the unemployment rate.) Since not all the people who are no longer unemployed could have gotten jobs, a fair number of them are now no longer looking for work.

The actual net increase of 227,000 jobs gets converted to  a loss of 11,000 through the magic of seasonal adjustment. As the BLS says: "The effect of such seasonal  variation can  be  very large; seasonal fluctuations may account for as much as 95 percent of the month-to-month changes in unemployment."

The BLS also oublishes a report on the under-employed. According to this, the situation improved from 17.5% to 17.2%.  Not much but at least we are moving in the right direction.

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by: Michael Marsh @ Sun Dec 06, 2009 at 05:58:33 AM CST

[ Parent ]

Do you know how (0.00 / 0)

the BLS distinguishes between "unemployed" and "not in the labor force"?

If "unemployed" simply means "collecting unemployment compensation" there are a lot of caveats...

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by: elwood @ Sun Dec 06, 2009 at 06:41:16 AM CST

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from the BLS website... (4.00 / 1)

...some frequently asked questions

Is the count of unemployed persons limited to just those people receiving unemployment insurance benefits?

No; the estimate of unemployment is based on a monthly sample survey of house-holds. All persons who are without jobs and are actively seeking and available to work are included among the unemployed. (People on temporary layoff are included even if they do not actively seek work.) There is no requirement or ques-
tion relating to unemployment insurance benefits in the monthly survey.

Does the official unemployment rate exclude people who have stopped looking for work?

Yes; however, there are separate estimates of persons outside the labor force who want a job, including those who have stopped looking because they believe no jobs are available (discouraged workers). In addition, alternative measures of labor underutilization (discouraged workers and other groups not officially counted as unemployed) are published each month in the Employment Situation news release.

The BLS website explains everything you want to know about unemployment and employment and the methodology is very transparent.

One of the things I found interesting is evil socialist Vermont, home of an income tax and a sales tax,  has a lower unemployment rate than the Live-Free-Or-Die state does. So how's that NH advantage working out these days?

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by: Michael Marsh @ Sun Dec 06, 2009 at 08:10:31 AM CST

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