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U.S. Employment Situation (January 2012)
published by Bruce Steinberg | Feburary 3, 2012

named as a Top 100 Influencer in HR-Recruiting

 

 

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What is the "real" unemployment rate?
 

There is little disagreement that one reason that the unemployment rate has fallen recently is because the labor force has stopped growing and is contracting. But if one concludes that the declining unemployment rate is solely due to the labor market tightening, that conclusion is subject to interpretation. Many believe that because of the poor economy, many have simply given up looking for work so the  labor force has shrank (and the unemployment rate declines). The official unemployment rate, which is widely reported, only tells part of the story.

 

And how does the contraction of the labor force impact GDP, or gross domestic product, which is the broadest measurement of the health of the economy? (We'll leave that discussion for another time, but by one estimate, if the "missing" workers were to quickly move back into the ranks of the employed, that it would add about two percent to GDP.)

 

Actually, the federal government does report what it labels as "Alternative measures of labor underutilization" (government-speak for "unemployment rate") with six variations; the official unemployment rate is just one of them. When discouraged workers are calculated in, the unemployment rate rises by a little more than one-half of a percentage point; add in all persons who are marginally attached to the labor force (those who are neither working or looking for work, but say they want a job and are available) and another percentage point is added to the unemployment rate. And persons working part time for economic reasons would account for another five or more percentage points.

 


I founded Creative Staffing in 1985. About five years later, I first met Bruce when I was the president of the Florida Staffing Association (then known as the Florida Association of Temporary Services) when he first joined the staff of the American Staffing Association (was National Association of Temporary Services, NATS). In the more than 20 years that I have known him and seen his career progress, I have also known many staffing service consultants and experts. Plainly stated, he is the BEST employment analyst there is. He understands our challenges and industry like no other. -- Ann Machado, President | CEO | Founder, Creative Staffing, View more Testimonials


 

Therefore, by the broadest measurement of labor underutilization, or U-6, the quasi-unemployment rate in January 2012 was 15.1 percent, compared to the official rate of 8.3 percent. A year earlier, U-6 was 16.1 percent and the official unemployment rate was 9.1 percent, so the situation has improved. In comparison, in June 2010, when the recession officially ended, the unemployment rate was 9.4 percent and U-6 was 16.5 percent.

 

(continued, below, left)

 

 

But there are a number of reasons why people are no longer active members of the labor force and this  inflates the alternative measurements of unemployment. Because of the widely reported skills gap, many who can't find a job because of inadequate skills have gone back to school to be re-skilled, re-educated, and re-trained.

 

Some government programs, albeit well intentioned, have become de facto early retirement programs for those unable to find work, or "acceptable" work.

 

To what extent have the unemployment compensation extensions artificially inflated the number of unemployed workers? How many workers, unwilling to invest in new skills, claim to be looking for work to receive the benefits rather than simply retire?

 

The labor force participation rate, which we report every month in this report, is now 63.7 percent-- five years ago it was 66.4 percent. And a similar number, which we also report, is the employment-to-population ratio. In January 2012, it was 58.5 percent and five years ago it was 63.3 percent.

 

With so many no longer counted as part of the labor force, but would like to be members of the labor force, is also why that when the economy starts to markedly improve, the official unemployment rate may actually rise because people who have been on the sidelines (and therefore not counted as part of the labor force) may jump back in the labor pool. But, they don't all get jobs right away, so if the labor force expands and the unemployment rate may rise as well.

 


 

Identifying growing sector in local service markets ...

our Employment Tracking Tool that is designed to assist you in identifying and evaluating new sectors and markets. It examines the overall employment trends by industry in the given market to help determine possibly under-serviced industries to target marketing efforts (as well as what industries to avoid). By doing this, it shows what industries are growing and therefore are in expansion mode making them eager for a wide variety of products and services and likely in need of additional staff.

Demonstrations of both strategic planning tools are available.

Then use our Temporary Help Services Interactive Data Book tool will enable to benchmark your staffing operation at the local level to see exactly where you are positioned in the market and if your offices are performing up to local staffing sector trends.

See further descriptions of these two strategic planning tools and links to the demos

 


Who's the "ultimate consultant's consultant"?

"Bruce is an invaluable resource to me in working through the strategic planning process with my clients in the staffing industry. Bruce consults with me on each engagement and customizes his deliverables accordingly, exceeding my expectations each time. He expediently gathers and compiles the data I need and delivers it in user-friendly reports which make the analysis portion of my job easy. Because with Bruce's assistance I can make strategy recommendations with confidence and accuracy, my clients benefit greatly in turn. He is the ultimate "consultant's consultant." -- Amy Bingham, Bingham Consulting Professionals


View more Testimonials

 

January 2012 Employment Report

 

Quick recap --

The unemployment rate continued to decline and was 8.3 percent in January, down from 8.5 percent in December. This is the fourth consecutive month that it decreased after being at either 9.1 or 9.0 percent for most of last year up until October 2011. The unemployment rate was 9.1 percent a year earlier in January 2011.

 

See more detail under the "Household Survey" heading at the bottom of this box.

 

The news coming from the other side of the employment report was quite positive as well.  Please note that the jobs data has undergone an annual benchmarking process so many figures may be a different levels than last reported.

 

The total number of jobs rose by 243,000 in January; it was up 157,000 in November and up 203,000 in December.  Factor out the decline of government jobs and private-sector payrolls rose by 257,000 jobs in January, up from the 178,000 rise in November and the increase of 220,000 in December. The previously reported December data included an increase of 42,200 Couriers and messengers but that was revised to a 7,200 decline. No mention of this fairly large discrepancy in BLS published materials, but we have a theory (see below).

 

Jobs Report

Growth in the number of jobs in the private Goods-producing sector picked up a little speed and grew by 81,000 in January (was up 71,000 in December) due to ...

  • The Construction sector was able to nail together 21,000 more jobs in January (was up 31,000 in December) courtesy of the Nonresidential specialty trade contractors, which added 9,700 more jobs.

  • Manufacturers put together 50,000 new jobs last month (they were up by 32,000 in December) with Durable goods adding 44,000 jobs with strong growth in Transportation equipment, Fabricated metal products, and Machinery again in January; Nondurable goods added 6,000 jobs.


Looking for more? Check out our podcasts!

Podcasts of the current employment situation will be available by 4:30 p.m. EDT Friday, February 3rd. The video podcast, which you can start and stop to study the tables and graphs as well as replay individual sections, also includes additional data and information.  Watch the video version here or just listen to the audio version here (no special hardware or software required), which also can be downloaded to an iPod.


  • Mining and logging continued to pump out new jobs -- it added 10,000 in January with the vast majority of those new jobs in the Support activities for mining sub-sector.

The private Service-providing sector added 176,000 new jobs in January, which was 27,000 better than the 149,000 it added in December.

  • The holiday job-hiring season extended into January for the Retail trade sector as it added 10,500 jobs.

  • Wholesale trade added 14,000 jobs in January after adding 14,800 in December.

  • The Transportation and warehousing sector added 13,100 jobs in January. Couriers and messengers declined by 1,500 in January and now reported to have declined by 7,200 in December (was initially reported as a 42,200 increase). We keep with the commonly accepted practice of reporting seasonally adjusted jobs data. But we can't help but wonder if someone mistakenly forgot to apply the seasonally adjustment factor for this sector in the December report since it did add almost 71,000 non-seasonally adjusted jobs that month.

  • The Financial activities sector subtracted 5,000 jobs in January after it added 4,000 in December.

  • The Professional and business services sector added 70,000 jobs in January after bringing in 63,000 new jobs in December. Computer systems design and related services added only 1,700 jobs in January, but that sector is experiencing a fairly severe skill shortage so it probably would have been more if greater numbers of skilled IT / computer professionals were available. Management and technical consulting services was able to figure out how to add 3,000 jobs.

  • The Education and health services sector added a total of 36,000 jobs in January with the highly seasonal Educational services sub-sector contributing 5,600 of those new jobs. This means that the Health care and social assistance portion was up 29,700 jobs, with most major sub-sectors adding jobs. The only sub-sector to experience a decline was Social assistance, which includes Child day care services.

  • The party continued in the Leisure and hospitality sector and added 44,000 jobs in January after bringing in 19,000 in December.

  • The total number of Government jobs was down last month by 14,000. In January, the Federal government was down by 6,000 despite the USPS only canceling 600 jobs, State governments actually added 3,000 jobs in January, and Local government job rolls were slashed by 11,000.

Temporary Help Services Roundup

The previously reported decline in Temporary help services jobs for December was revised to growth of 8,300 and the sector added 20,100 new jobs in January. In January, Temporary help services jobs were up 0.8 percent to 2,406,000 and up 7.1 percent year-over-year. 

 

With the revised data, we know that the Temporary help services sector experienced job growth of 10.8 percent in 2011 and 14.7 percent growth in 2010 compared to a decline of 22.7 percent in 2009.

 

NEW FEATURE UPDATED: For a presentation of Temporary help services' performance, with annotations with unemployment rates at key turning points, from 1990 to the present, click here

 

(if chart is unclear, click on it to open in a browser window)

 

The Temporary help services sector has added about 650,000 jobs since growth restarted in September 2009. Temporary help service's market share, that is its portion of all jobs, was 1.82 percent in January, up from 1.81 in December; just six months ago, it was 1.75 in July 2011. For those who follow this metric, it may appear to be greatly improved from what we reported last month. Note that the annual rebenchmarking revision made to BLS jobs data affected this measurement.

Household Survey

The January 8.3 percent unemployment rate was its lowest since February 2009. However, because of updated population estimates, which are from mainly from the results of the 2010 Census, comparisons with December figures are not valid. Essentially, the adjustments increased the size of the population, the labor force as well as the number of people who were employed, unemployed, and not in the labor force.

 

The employment-to-population ratio was 58.5, little changed from the 58.4 in January 2011 while the labor force participation rate was 63.7 percent in January 2012 and was 64.2 percent in January 2011. In addition, the number of discouraged workers was 1,059,000 in January 2012 and 993,000 in January 2011.

 


NEXT EMPLOYMENT REPORT -- FRIDAY, MARCH 9, 2012

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