5% of people qualify for unemployment benefits I believe, not that 95% of people that want jobs have them. For most purposes an essentially useless measurement.
"A broader measure of unemployment that includes people too discouraged to search for work or who are making do with a part-time job because they cannot find a full-time one, stayed steady at 9.7 percent."[0]
> 5% of people qualify for unemployment benefits I believe
Incorrect; the headline rate does not only include those qualified for unemployment benefits (it does only include that part of the working-age non-institutionalized population out-of-work and actively looking for work, though.)
> You have to contrast it with new unemployment rates.
IIRC, the concern is that hiring slowdowns tend to lead increases in unemployment. But, yes, the unemployment rate (not just the headline rate, but all of the alternative measures from BLS as well) is still dropping.
the unemployment rate dropped because more people left the workforce and became discouraged workers (a la haven't searched for work in the past 4 weeks).
> the unemployment rate dropped because more people left the workforce and became discouraged workers
For the last monthly downtick, if you look at all the alternative measures [0], that's not the case. Actually, what you see is that the headline unemployment rate dropped, but the difference is mostly a shift from unemployed to working part time for economic reasons; discouraged workers have stayed about the same.
> (a la haven't searched for work in the past 4 weeks).
Discouraged workers are not "haven't searched for work in the past 4 weeks" its that subset of the marginally attached ("those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months") who "have given a job-market related reason for not currently looking for work." [0, again]
> The unemployment rate is not a good metric. The labor force participation rate is more inclusive
LFP rate is not better than the unemployment rate. There are a lot of factors that go into labor force participation, and demographics is probably the biggest. It peaked in the late 90s and has pretty much followed the same downward trend since:
You're making my point for me. Demographics matter. The older bubble demographic nearing retirement, and the new bubble demographic is not taking up the slack.
Not taking up the slack implies there's something wrong with the new bubble demographic. There appears to be less slack to take up. As you pointed out, lower quality jobs.
That's why you use the prime age (25-54) employment rate: http://data.bls.gov/timeseries/LNS12300060 which has only clawed about halfway back since the property bubble burst (and which has been stagnant this year to date.)
The reason we don't use LFP is because it doesn't impact prices that much. The UE rate does as it controls salaries which controls inflation/prices.
LFP and UE are both useful metrics, but they're used for different things. I am a big fan of labor force participation as I find the shift in our culture from a working one to one that doesn't interesting.
However, from the point of view of inflation (a driver of the funds rate and our economy in general), you really need to look at the unemployment rate.
Another way to look at it.. Changes in LFP rarely impact currency values much. Changes in UE rates do. And trust me, currency traders are very very apolitical. They care very little for conspiracy schemes. They just look at the relevant numbers and fight with their wallet.
Again, the numbers you pay attention to really depend on what you're trying to understand. A currency trader isn't exactly looking at them the same way I am.
Labor force participation rate is not a good metric either. It counts more people going to school as a negative and fails to account for changing ratios of working to retired people.
But seriously, when I was a young guy I learned quickly that we are all temporary. One day your working the next day you could be on out on your ass. That's when I started living like I could be on the street tomorrow. Happily I can say that I was never without work but as a result of living with what I need and not what I want I amassed a small fortune and financial freedom.
News media ought to pay more attention to the confidence intervals associated with these metrics. Uncertainty is always present in statistics and the revisions to these numbers rarely get reported (it was reported in this case to fit the tone of the story). News articles like these have a powerful psychological effect on the public, so shouldn't the media do a more responsible job by saying "oh by the way, it's 38,000 jobs +- 50,000"?
Probably they figure they have to dumb it down for people to understand it. Which is hugely patronizing, and underestimates people I think. I wish the media would take their jobs more seriously in general, because, while there are scattered exceptions, by and large they distort facts, twist things, and misrepresent things to the point where it's nearly impossible to get an accurate view of the reality. Which is a complete shame, because they really have a powerful effect on people's views and those people go on to vote for idiot politicians and just plain wrong policies. I know in politics everyone has an opinion, but that doesn't mean all opinions are equally valid. More often than not the popular opinions are so off base with reality that it's sad, or scary, or both.
And if you think it's bad in the US - look at Venezuela - a prime example of an ignorant and poor populace supporting bone-headed policies and politics until the country is reduced to a shambles. Democracy can only be as good as the voters, unfortunately - and the media bears a heavy responsibility there.
> For example, the confidence interval for the monthly change in total nonfarm employment from the establishment survey is on the order of plus or minus 115,000.
I have often thought the same thing - they are essentially reporting on something with a quite low signal to noise ratio, but they don't know what that is. And yet many important decisions are based on the monthly numbers.
Well, that's worrisome. The hiring rate, along with new unemployment benefit applications and various other stats is the an early indicator for the macro economy.
37 comments
[ 3.0 ms ] story [ 41.5 ms ] threadhttp://www.bls.gov/news.release/empsit.t15.htm
"A broader measure of unemployment that includes people too discouraged to search for work or who are making do with a part-time job because they cannot find a full-time one, stayed steady at 9.7 percent."[0]
[0]http://www.nytimes.com/2016/06/04/business/economy/jobs-repo... (credit: dforrestwilson1)
Incorrect; the headline rate does not only include those qualified for unemployment benefits (it does only include that part of the working-age non-institutionalized population out-of-work and actively looking for work, though.)
IIRC, the concern is that hiring slowdowns tend to lead increases in unemployment. But, yes, the unemployment rate (not just the headline rate, but all of the alternative measures from BLS as well) is still dropping.
For the last monthly downtick, if you look at all the alternative measures [0], that's not the case. Actually, what you see is that the headline unemployment rate dropped, but the difference is mostly a shift from unemployed to working part time for economic reasons; discouraged workers have stayed about the same.
> (a la haven't searched for work in the past 4 weeks).
Discouraged workers are not "haven't searched for work in the past 4 weeks" its that subset of the marginally attached ("those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months") who "have given a job-market related reason for not currently looking for work." [0, again]
[0] http://www.bls.gov/news.release/empsit.t15.htm
http://www.nytimes.com/2016/06/04/business/economy/jobs-repo...
Furthermore the quality of available jobs appears to have declined.
LFP rate is not better than the unemployment rate. There are a lot of factors that go into labor force participation, and demographics is probably the biggest. It peaked in the late 90s and has pretty much followed the same downward trend since:
http://www.tradingeconomics.com/united-states/labor-force-pa...
http://www.randalolson.com/wp-content/uploads/united_states_...
Unemployment also ignores the disability insurance bubble.
LFP and UE are both useful metrics, but they're used for different things. I am a big fan of labor force participation as I find the shift in our culture from a working one to one that doesn't interesting.
However, from the point of view of inflation (a driver of the funds rate and our economy in general), you really need to look at the unemployment rate.
Another way to look at it.. Changes in LFP rarely impact currency values much. Changes in UE rates do. And trust me, currency traders are very very apolitical. They care very little for conspiracy schemes. They just look at the relevant numbers and fight with their wallet.
1. families with exactly one full-time job, nothing else 2. families with a full-time job and additional job(s) 3. families without a full-time job
You'd want to calculate those numbers two ways:
1. for all households 2. excluding households with all members over age 65
But seriously, when I was a young guy I learned quickly that we are all temporary. One day your working the next day you could be on out on your ass. That's when I started living like I could be on the street tomorrow. Happily I can say that I was never without work but as a result of living with what I need and not what I want I amassed a small fortune and financial freedom.
* Who is hiring? (June 2016): https://news.ycombinator.com/item?id=11814828
* Who wants to be hired? (June 2016): https://news.ycombinator.com/item?id=11814830
And, if you feel like freelancing:
* Freelancer? Seeking freelancer? (June 2016): https://news.ycombinator.com/item?id=11814829
And if you think it's bad in the US - look at Venezuela - a prime example of an ignorant and poor populace supporting bone-headed policies and politics until the country is reduced to a shambles. Democracy can only be as good as the voters, unfortunately - and the media bears a heavy responsibility there.
http://www.bls.gov/news.release/empsit.tn.htm
So 38,000 +- 115,000. In other words, they don't really know if employment went up or down.
Non-Farm Payroll: Best Years, Worst Month
Year Annual (000s) Worst Month (000s)
1984 3,880 128
1994 3,851 200
1983 3,458 -308
1997 3,408 -39
1988 3,242 94
1999 3,177 107
1987 3,153 171
1998 3,047 124
1996 2,825 -18
1993 2,817 -49
2014 2,5851 142
2005 2,506 67
1985 2,502 124
2013 2,331 84
2012 2,236 88
1995 2,159 -16
2006 2,085 2
2011 2,083 70
2004 2,033 32
12014 is the hiring pace through August.
[0]http://www.calculatedriskblog.com/2014/09/payroll-employment...