Monday, October 05, 2009

Ranks of Jobless Swelling, True Unemployment Reaches 17%

The September jobs report was released on Friday, and it was bleak.

Last month, another 201,000 jobs were lost and the "official" unemployment rate rose from 9.7% to 9.8%.

However, the so-called U-6 employment measure — the figure that includes jobless Americans who have become discouraged and those working part-time but desire full-time jobs — has reached 17%, or a total of 26.5 million Americans.

The average workweek for production and nonsupervisory workers has fallen back to 33 hours, a record low. Those workers will see their hours increase before new jobs are created.

The number of long-term unemployed — workers who have gone jobless for 27 weeks or more rose — by 450,000 to 5.4 million. In September, 35.6 percent of unemployed persons had been jobless for 27 weeks or more.

In the 21 months since the downturn began, there has been a net loss of 7.6 million jobs, wiping out all job creation this decade. This will be remembered as the lost decade of employment.

Advance Realty and Rutgers produced an issue paper last month, America’s New Post-Recession Employment Arithmetic, which noted the following:

As of August 2009, the nation had 1.3 million (1,256,000) fewer private sector jobs than in December 1999. This is the first time since the Great Depression of the 1930s that America will have an absolute loss of jobs over the course of a decade.

The U.S. Bureau of Labor Statistics projects the nation’s labor force to grow by approximately 1.3 million persons per year between 2006 and 2016. Therefore, the nation has to add 1.3 million total jobs per year— consisting of private-sector and government payroll employment as well as contract (nonpayroll) employment—simply to accommodate a growing labor force [as consequence of population growth].

Given conservative estimates of further employment declines (even if the recession ends in the third quarter of 2009) and the continued increase in the labor force, the nation’s employment deficit could approach 9.4 million private-sector jobs by December 2009.

Even if the nation could add 2.15 million private-sector jobs per year starting in January 2010, it would need to maintain this pace for more than 7 straight years (7.63 years), or until August 2017, to eliminate the jobs deficit!

* Addendum: The Bureau of Labor Statistics later made the largest benchmark revision in at least the past dozen years. From March 2008 to March 2009, the BLS overestimated payroll employment by some 824,000 jobs, or nearly 70,000 jobs per month.

We now know that the government has been systematically underestimating job losses for the last three years. So as bad as the most recent employment report was, in reality it was even worse. The revision will not officially be incorporated into the job figures until February, and could be revised yet again.

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