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Friday, July 08, 2011

I thought I had written the last of these...Another Employment Situation report

The Bureau of Labor Statistics released its Employment Situation Report for June 2011 today. I thought--I hoped--I had written my last set of comments on this subject, at least for a while. But this is not good. Not good at all.

Many of the comments I have seen are focuses on the monthly changes, and they are discouraging. A net 18,000 increase in jobs (+57,000 private, -39,000 government). But a single bad month is not something to get too worrier about. So I decided to look at the change since June 2010, and the change since the "official" end of the recession, conveniently two full years, June 2009.

Total employment in the last year has increased by 0.8%. In the two years since the end of the recession, growth in total employment has been 0.4%--only 0.2% per year (total employment actually fell, by 0.4%, in the first year after the "end" of the recession.) Simply to keep up with employment growth, we'd need employment growth of more like 1.3% to 1.5% per year. To return to pre-recession levels in anything like a reasonable amount of time, we'd need growth like that coming our of the 1982-3 recession--when employment growth averaged about 3% per year for 6 years...when employment growth in the first couple of years pushed 5% per year. The economy is not just "running in place;" it's falling further and further behind.

That might be acceptable if private sector employment were booming. But it's not, it has grown just 1.6% in the past year and only 0.9% over the past two years (falling, obviously, between 2009 and 2010). Again, the contrast with the mid-1980s is instructive--private sector employment grew by more than 3% per year over a six-year period.

And even that might be acceptable, except that public sector, particularly state and local, employment has actually declined. State employment is down by 1.5% and local government b7 2.9% over the past two years. Federal government employment has increased, by 0.6%--16,000 jobs--since 2009.

The economy is growing so slowly, overall, and both in the private sector and in the public sector, that we are not even keeping pace with population growth and we are making even less progress in returning to our pre-recession levels of employment.

The employment-population ratio, which was 63% in June 2007 (before the official beginning of the recession, in December 2007), and which had declined to 59.4% in June 2009 (the official trough of this business cycle), has continued to fall in what is officially the recovery, and now is at 58.2%. By contrast, the employment population ratio rose from 63.9% in 1983 to 66.5% in 1989, rising every year.

As a result, people are dropping out of, or not entering the labor force. The labor force participation rate, which was 66% before the recession is now 64.1% and falling; it is lower now than it has been since 1982.

And the slow growth in employment has kept the unemployment rate from falling very much during the "recovery," even though the labor force is shrinking. Coming out of the recession in the 1980s, the unemployment rate fell from 10.1% in June 1983 to 7.2% in June 1984. Not this time. In June 2009, at the trough, the unemployment rate was 9.5%. June 2010, one year later? 9.5%. June 2011, two years later? 9.2%.

But maybe that's all a result of harder times for part-time workers. Well, no. For full-time workers, the unemployment rate, which was 10.3% in June 2009, is still 9.8%. In the 1980s? Down from 10.2% to 7.1%.

How about wages? Nominal wages have risen since the trough, by a whopping 4.5%--remember, that's over two years. But prices have risen (slightly) faster, so real wages have increased more slowly, by 1.3%, in the two years since the trough of the recession--and have declined in the past year. During the recovery.

I'm too depressed to continue. Me and what passes for a recovery.


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