Posted: September 02, 2014
The Economist: Employment statistics
What do they tell us about the economy?Tucker Hart Adams
As I told a businessman who said he only had time to pay attention to one statistic, the single most important piece of economic data is the employment figure.
The United States economy added 288,000 jobs in June, the fifth consecutive month of gains exceeding 200,000. The unemployment rate fell to 6.1 percent, continuing a decline that began in November 2009. Clearly the economy is improving on the job front. But, is there more to the story?
Each month the federal government’s Current Employment Statistics (CES) program surveys approximately 144,000 businesses and government agencies, representing approximately 554,000 individual worksites, to provide detailed industry data on employment on non-farm payrolls.
The data exclude proprietors, the unincorporated self-employed, unpaid volunteers or family employees, farm employees and domestic employees. Government employment covers only civilian employees; military personnel are excluded.
People on establishment payrolls who are on paid sick leave (for cases in which pay is received directly from the firm), on paid holiday, on paid vacation, or who work during part of the pay period even though they are unemployed or on strike during the rest of the period are counted as employed. What this tells us is that those reported as “employed” don’t necessarily work the entire month, or full-time. One reason for the sluggish recovery from the Great Recession is that about 1 million of the middle- and high-wage jobs lost during the downturn have not been replaced, while there are 1.8 million more jobs in low-wage industries.
The government conducts a second, smaller employment survey that provides data on people not covered in the CES, including those who are unemployed. The Current Population Survey is a monthly assessment of households that provides a comprehensive body of data on the labor force, unemployment and persons not in the labor force.
In June, the CES survey showed the number of persons employed part-time because their hours had been cut or they were unable to find full-time work (sometimes referred to as involuntary part-time workers) increased by 275,000 in June to 7.5 million, although it is down over the year. The broadest measure of unemployment, the U-6, which adds these involuntary part-time workers and people who’ve looked for a job in the last year but not in the last four weeks to those counted as unemployed, was 13.4 percent at the end of the first quarter (most recent data available). This broader unemployment rate, which is seldom covered by the media, was 12.1 percent in Colorado, almost double the commonly reported unemployment rate of 6.5 percent.
The good news? The number of long-term unemployed (those jobless for 27 weeks or more) declined by 293,000 to 3.1 million in June. Over the past 12 months, the number of long-term unemployed has decreased by 1.2 million.
But, the percentage of the working-age population in the labor force remains low, at 62.8 percent, another reason for the dawdling recovery.
So while news on the employment front is generally positive and my own personal indicator – the number of Help Wanted signs around town – is up, there is more to the jobs figures than just the headline.
Tucker Hart Adams, president of the Adams Group, monitored and analyzed the Colorado economy for 30 years. She can be reached via her website, coloradoeconomy.com.