Unemployment: It's Even Worse than You Think 37 comments
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I am not going to break down the full unemployment data because, like much of our government reporting, it is "garbage in, garbage out" and "you can't handle the truth" mixed together. If you are newer to my website, please peruse these entries during your spare time.
- [Oct 2, 2009: True September Unemployment in America Reaches Towards 14%; Our System is Broken].
- [Apr 3, 2009: Real March Unemployment Rate Reaches 12.5%] <---last time I reviewed all the inaccuracies of the report
- [Apr 2, 2008: The Underemployment Rate is Rising]
- [Jan 27, 2008: Monthly Jobs Report & Birth Death Model]
- [May 10, 2008: Finally Some Mainstream Reporters are Figuring Out the "Spin" from Government]
But I want to point out a few key metrics and conclusions. First, the politicos (both parties) have changed our metrics since the early 90s. You will hear today that the unemployment rate is the worst it has been in 26 years; that is inaccurate. As best as I can "retrofit" the measurement today, in an apples to apples comparison, if we measured unemployment as we did in the late 70s, early 80s we'd be somewhere in the mid teens. It's been roughly a 4% spread over the old ways we used, i.e. we've been understating by about 4%... so figure 14.2% unemployment.
Second, this data actually comes from two reports; the downright scary thing is the second survey (household) shows the workforce shrunk again. Recall, in America if you don't look for a job for 4 weeks you are no longer unemployed. What we have seen in the past many months (and again this month) is a shrinkage in the labor force. This has held down the unemployment rate. When people actually begin to believe there are jobs to be had, they will go out searching, which will immediately move them from "nowhere to be found in America's statistics" back to "unemployed" pushing up the unemployment rate. I thought this is what happened Friday as the rate jumped 0.4%. But lo and behold, the unemployment rate surged even as the workforce shrunk. Again... scary.
Third, other key metrics; The work week is stuck at all time lows: 33 hours. Long- term unemployed continues to surge, and I have not looked for it, but the "birth death model" surely has overstated the results by "creating" jobs in businesses too small to measure. Keep in mind, the government 'fessed up that through the one year ending March 2009, they overstated the "birth" of jobs by over 800K, which is why acting like a lemming because any of these flawed government numbers is silly. I expect in March 2010, they will come back and say "oops, we did it again" (with apologies to Britney Spears)
Fourth, the 2 positives: (a) wages gained 0.3%, far better than we have seen in the past few months where it has been 0.0% to 0.1% most of the time (b) temporary workers gained by 34,000 - the first increase since December 2007. So point (a) is an actual green shoot and point (b) is something the market looks for as employers at first stage of recovery hire temp workers first.
We continue to add jobs in the two places that are in and of themselves massive Ponzi schemes - federal government and healthcare (which is pseudo government). These are 2 sectors that we don't actually have to pay the bills today, so we just increase their costs each and every year, and borrow to do it. Therefore, in theory, as long as we can print or borrow more money, the job growth in these 2 sectors can explode ever higher - and that's what's been happening for 2 decades. Not once in this recession, not even in the worst of it a year ago, did we lose jobs in healthcare. It's a magical sector.
Conclusion:
I am surprised the stock market was not up 5%+ in pre market. Remember, fewer employees is a "great thing". It means (a) better corporate profits and (b) easy money from our central bank for as long as the eye can see. Remember, the economy does not need you anymore [Sep 22, 2009: BusinessInsider - The Real Problem is the Economy Does Not Need you Anymore] - we have the Asians to do our work. Jobs only slow down Americans' ability to shop. We can continue the Ponzi scheme economy where instead of getting wages for income, our government endlessly borrows money we don't have (or prints it) [Jun 5, 2009: 1 in 6 Dollars of Income Now Via Government; Highest Since 1929] [Jul 30, 2009: Cash for Clunkers a Bit Hit, Government Asks "What Can we Buy You Next?"] Government helps buy us houses, cars... heck even lets us rent our own homes from ourselves if we cannot afford it. What's not to love?
So after an initial hit to the jaw, just as we saw a month ago as people are staggered that things are not improving, speculators should go back to joy by early this week as they realize - in their world - life is good. Main Street is an afterthought; the market should come to its senses shortly and realize everything is on "track".
Can you hear the next stimulus act being written as we speak? Shhh... listen... you can almost hear the money bring printed from here.
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This article has 37 comments:
year of which the last three months we have lost 576,000.In other words
the last three months (25% of the time) has constituted only 10% of the payroll jobs lost.If you look
at Table B-1 of the Establishment Data the the job losses in the last
three months are concentrated in basically four industries Construction,Durable Goods,Retail Trade,Leisure and Hospitality.These
industries make up 31% of the workforce but now constitute 86% of the joblosses in the last three
months.In other words 69% of the workforce is now experiencing virtually no job loss in the last three months.
Even though no-one really wants to hear it, we are developing a permanent underclass in our society. And as we continue to bleed jobs from the US to overseas that segment will get larger and larger. Until and unless we develop an industrial and energy policy that is focussed on the best interests of the USA this is only going to get worse.
GOVERNMENT + HEALTHCARE + EDUCATION
what I called the government + pseudo government. The "stimulus" (snicker) was used as a state bailout. That saved some 400K education jobs.
Therefore what i am trying to get to is 1/3rd of the workforce in America is shielded from reality and you can only lose so many jobs. Federal government has only lost jobs in 2 months since 2007 that I can remember, education has lost in more months but has been mostly shielded, and healthcare have never had 1 losing month that I can recall.
Therefore only the other 2/3rds of the economy is actually affected by "reality".
On Nov 08 09:57 AM bbro wrote:
> We have lost 5.5 million jobs in the last
> year of which the last three months we have lost 576,000.In other
> words
> the last three months (25% of the time) has constituted only 10%
> of the payroll jobs lost.If you look
> at Table B-1 of the Establishment Data the the job losses in the
> last
> three months are concentrated in basically four industries Construction,Durable
> Goods,Retail Trade,Leisure and Hospitality.These
> industries make up 31% of the workforce but now constitute 86% of
> the joblosses in the last three
> months.In other words 69% of the workforce is now experiencing virtually
> no job loss in the last three months.
this summer the govenrment said "woops" we were wrong by close to 850K jobs in the previous year... they overstated it. That is effectively 70K jobs a month they lost. They use a thing called birth death model... where they "create jobs" out of thin air in companies too small to measure. There were many months in 2008 that the government was saying CONSTRUCTION was adding jobs. I don't know how you can make any sort of counter argument to me when this is a garbage in, garbage out report. It's myth. Fiction.
On Nov 08 09:57 AM bbro wrote:
> We have lost 5.5 million jobs in the last
> year of which the last three months we have lost 576,000.In other
> words
> the last three months (25% of the time) has constituted only 10%
> of the payroll jobs lost.If you look
> at Table B-1 of the Establishment Data the the job losses in the
> last
> three months are concentrated in basically four industries Construction,Durable
> Goods,Retail Trade,Leisure and Hospitality.These
> industries make up 31% of the workforce but now constitute 86% of
> the joblosses in the last three
> months.In other words 69% of the workforce is now experiencing virtually
> no job loss in the last three months.
GOVERNMENT + HEALTHCARE + EDUCATION *
Wait wait...add government protected bankers!
Large corporations can move jobs offshore, and small businesses are ignored in America because they don't have a great lobbyist group. Most work is in small biz.
So when the recession is "over" (i.e. "now") those jobs are not there to go back TO. I think people do not understand why we keep getting jobless recoveries... how many millions of jobs have been moved slowly outside the borders and we have replaced them mostly only with bubble jobs. Where are all these ex realtors going to work?
The next stimulus will be about retrofitting all the building in America with energy efficiency - I suppose that will get the ex construction workers working. But people don't seem to get it... we've created most of our "new work" in the "service economy" the past decade via bubble. Tech bubble, followed by real estate bubble and now government bubble. Small biz and innovation ignored... big corporations worshiped... as they move the jobs overseas.
I'm sorry, I mean it's all about productivity and efficiency :0
On Nov 08 10:15 AM davidbdc wrote:
> Thanks for the article. I too had assumed that we jumped over 10%
> due to folks giving up looking for work.
>
> Even though no-one really wants to hear it, we are developing a permanent
> underclass in our society. And as we continue to bleed jobs from
> the US to overseas that segment will get larger and larger. Until
> and unless we develop an industrial and energy policy that is focussed
> on the best interests of the USA this is only going to get worse.
>
>
How do you interpret the fact that the “official” release actually shows that we went over the 10% high water mark?
I didn’t believe that this would ever be released much less an admission of such and that in itself told me that the containment of the real numbers is getting a bit harder than previously thought.
Good point about the 1/3 government and quasi-government sectors that make up our economy. That sector has also hidden the impact of the outsourcing and general mayhem visited on the shrinking real private sector which bears all of the declines. The magical sectors have retained their raises, employment and benefits.
Sadly, they have become dependable sources of votes and, with "private" beneficiaries of government policies, like, accountants, lawyers and bankers, and the recipients of government checks, we may never be able to vote policies that function in the real world, back in.
unless you have a time machine....and Ron Paul
On Nov 08 11:40 AM TraderMark wrote:
> p.s. you are also using government statistics as gospel. Did you
> read the piece?
>
> this summer the govenrment said "woops" we were wrong by close to
> 850K jobs in the previous year... they overstated it. That is effectively
> 70K jobs a month they lost. They use a thing called birth death model...
> where they "create jobs" out of thin air in companies too small to
> measure. There were many months in 2008 that the government was saying
> CONSTRUCTION was adding jobs. I don't know how you can make any sort
> of counter argument to me when this is a garbage in, garbage out
> report. It's myth. Fiction.
Or are you from Dick Cheney school of economics - deficits don't matter?
All these things I "hate" are things we cannot afford. Paying for them is a perpetual ala Ponzi scheme. We are borrowing against some unknown future asset stream, to pay for today. I am fine with things we can afford. Unfortunately we're technically bankrupt. If the US government was a corporation it would of been out of business a few decades ago.
I think that is the part not registering with many Americans. We can have all the goodies we want as long as we pretend there are no costs; which seems to be the way of the majority.
On Nov 08 06:05 PM bbro wrote:
> Ok Let's see TraderMark dislikes Government HealthCare and Education....you
> would love 1893...but we are not going back there
> unless you have a time machine....and Ron Paul
Whatever you do Dorothy, DON'T click your heels three times...Kansas ain't there anymore.
On Nov 08 11:38 AM TraderMark wrote:
> 1/3rd of the workforce is now
>
> GOVERNMENT + HEALTHCARE + EDUCATION
>
> what I called the government + pseudo government. The "stimulus"
> (snicker) was used as a state bailout. That saved some 400K education
> jobs.
>
> Therefore what i am trying to get to is 1/3rd of the workforce in
> America is shielded from reality and you can only lose so many jobs.
> Federal government has only lost jobs in 2 months since 2007 that
> I can remember, education has lost in more months but has been mostly
> shielded, and healthcare have never had 1 losing month that I can
> recall.
>
> Therefore only the other 2/3rds of the economy is actually affected
> by "reality".
On Nov 08 09:57 AM bbro wrote:
> We have lost 5.5 million jobs in the last
> year of which the last three months we have lost 576,000.In other
> words
> the last three months (25% of the time) has constituted only 10%
> of the payroll jobs lost.If you look
> at Table B-1 of the Establishment Data the the job losses in the
> last
> three months are concentrated in basically four industries Construction,Durable
> Goods,Retail Trade,Leisure and Hospitality.These
> industries make up 31% of the workforce but now constitute 86% of
> the joblosses in the last three
> months.In other words 69% of the workforce is now experiencing virtually
> no job loss in the last three months.
the USA will keep losing jobs until the wage levels are equalized across the pacific.
local government..it falls to 16%...so of the 69%...39% is healthcare and government and without local government it is 23%.....
On Nov 09 02:50 AM bigbear4511 wrote:
> Of the 69% how much is health care and government. More that half
> I bet.
is confusing apples and oranges....Debt is a balance sheet issue....
What are the US Assets????
Do you think of your mortgage as income??? Or do you think about the debt payment???
On Nov 08 09:04 PM TraderMark wrote:
> you do realize the government is running a massive deficit right?
>
>
> Or are you from Dick Cheney school of economics - deficits don't
> matter?
>
> All these things I "hate" are things we cannot afford. Paying for
> them is a perpetual ala Ponzi scheme. We are borrowing against some
> unknown future asset stream, to pay for today. I am fine with things
> we can afford. Unfortunately we're technically bankrupt. If the US
> government was a corporation it would of been out of business a few
> decades ago.
>
> I think that is the part not registering with many Americans. We
> can have all the goodies we want as long as we pretend there are
> no costs; which seems to be the way of the majority.
I have done my own investigation of the figures, and the fact that the BLS shows 9 percent unemployment for Architects is unbelieveable....for a profession sensitive to construction/finance and that which experienced mass layoffs across the board....the BLS should be ashamed of publishing a figure which represents that group as BELOW AVERAGE for unemployment rate. Amazing.
The rest is history of the past two years.
So, if the US consumers cannot consume so much anymore, who can? In perspective, I think that the corporations will turn to the new consumers they are creating through the same jobs they moved overseas.
Should corporations be blamed for that? Corporation are run to make profits and are not charities. Every three months thay have to show how well they are doing, and if they don't do well the market will crash them. The system works like this and the corporation simply follow the system. Either change the system or there is no one to blame. But what happens when corporations are saved by the state, not allowed to fail?... this is actually a change in the system, and the rules of the game should also change...
On Nov 08 11:45 AM TraderMark wrote:
> Unlike the late 70s and early 80s when many loss jobs temporarily
> and after the recession was "over" they want back to their old jobs,
> what people don't understand today is we have a structural change
> giong on.
>
> Large corporations can move jobs offshore, and small businesses are
> ignored in America because they don't have a great lobbyist group.
> Most work is in small biz.
>
> So when the recession is "over" (i.e. "now") those jobs are not there
> to go back TO. I think people do not understand why we keep getting
> jobless recoveries... how many millions of jobs have been moved slowly
> outside the borders and we have replaced them mostly only with bubble
> jobs. Where are all these ex realtors going to work?
>
> The next stimulus will be about retrofitting all the building in
> America with energy efficiency - I suppose that will get the ex construction
> workers working. But people don't seem to get it... we've created
> most of our "new work" in the "service economy" the past decade via
> bubble. Tech bubble, followed by real estate bubble and now government
> bubble. Small biz and innovation ignored... big corporations worshiped...
> as they move the jobs overseas.
>
> I'm sorry, I mean it's all about productivity and efficiency :0<br/>
On Nov 08 09:57 AM bbro wrote:
> We have lost 5.5 million jobs in the last
> year of which the last three months we have lost 576,000.In other
> words
> the last three months (25% of the time) has constituted only 10%
> of the payroll jobs lost.If you look
> at Table B-1 of the Establishment Data the the job losses in the
> last
> three months are concentrated in basically four industries Construction,Durable
> Goods,Retail Trade,Leisure and Hospitality.These
> industries make up 31% of the workforce but now constitute 86% of
> the joblosses in the last three
> months.In other words 69% of the workforce is now experiencing virtually
> no job loss in the last three months.
Where is going to come from, their harebrained ideas of, and misapplied globalisation ? No jobs and or low paid jobs, no purchasing power, high consumer and national dept, escalating & insolvent government programs... there is worse to come, much worse.
This is where we are headed.
In the great reshuffle America will feel like we are the hardest hit because we have such a high standard of living. many third workd countries the workers are walking or riding bicycles to work.
Our wages must come down to meet the global market place wages. But this is good thing because this depresses the cost of living which in turn reduces pressure on Social Security. As was seen this year payments are fixed for next year ie no COLA .
Meanwhile our natural resources are diminishing.
The problem is developing countries don't pay "Fair Wages". They pay wages that barely allow life to be sustained but not to buy excess of consumer goods and allow savings to occur. So how much growth can those markets yield?
I agree with the comment that we are creating a permanent underclass that will likely be always dependent on the goverment.
Healthcare reform will result in confiscatory taxes that will mark the point of no return to prosperity because no entitlement has ever been cut, and the goverment is powerless to effect cost containment.
To quote musicians as is done in the article;
It's the end of the world as we know it....and I feel fine!
REM
Health insurance that the employer pays is included in wage figures. We experienced a 33% increase in insurance costs in September. We are not the only small company being screwed by the health care system.
That DECREASED my employees actual weekly paycheck (she pays 20%), while INCREASING her "wages" as seen by the Department of Labor/BLS.
Much of the "increase" in wages over the past decade is due to increase in insurance costs - not real raises that people can spend.
We just don't get it.
On Nov 09 06:50 AM JudeJin wrote:
> the USA and China are acting together to keep the wage levels high
> in the USA and wage levels low in China, which will keep unemployment
> high in the USA and the employed slaves in sweat shop in china work
> their asses off.
>
> the USA will keep losing jobs until the wage levels are equalized
> across the pacific.
The issue I had was with the Birth Death model and the "850K hidden jobs" that were never reported lost. I'm not sure how high/low this girl was on the corporate ladder, but it seemed like I was speaking Greek to her.
She assured me they don't "fudge" the numbers... Yeah... right.
Remember people, we are WAY PAST the event horizon. The downward spinning will continue to accelerate at an accelerating pace.
Burn, baby, burn...and profit from it. Not real popular, but I'm not the one crashing the plane.
static.seekingalpha.co...
He certainly didn't expect that result or he wouldn't have hit himself.
Our economy is staying afloat (barely) on a wing and a prayer. Those in charge are having about as much fun as the folks in the picture linked below. The problem is that the control they think that they have is all an illusion.
static.seekingalpha.co...
And the illusions reported as truth coming from our federal bureaucracy are just as flimsy.
On Nov 09 10:27 AM The Geoffster wrote:
> In the 1980s, when I was a young self employed professional with
> a low six figure income, a wife, two children and a mortgage, I felt
> fortunate that I could afford the private tuition bills, health insurance
> premiums and contribution to my self funded retirement plan. I also
> put money aside for the children's college education. Each summer
> we would spend two weeks at the beach. I was living the American
> Dream, but I often wondered how my peers could afford second homes,
> large boats and fancy vacations on top of their other expenses. It
> turned out they were leveraged to the hilt and hadn't put anything
> away for retirement, much less college or a rainy day. Now they've
> lost their second homes and are underwater with second mortgages
> on the houses they've lived in for 20 plus years. They're pissed.
> They think Bush and Wall Street did this to them. It would be funny
> except that I'm describing the upper middle class. They should have
> known better, but they bought into the Me Generation hype. They thought
> credit limits should be maxed out and that they were "entitled" to
> live beyond their means. Sound familiar? I'm retired now and investing
> for income but it's tough because yields are low and I have to be
> conservative. I've cut back my spending and should survive the financial
> onslaught until the leftists confiscate everything I've worked for.
> I just didn't realize I was doing everything wrong. I guess I'll
> never get that boat.
static.seekingalpha.co...
Local news saying that the State economist noted an uptick in the hiring of temps and that this signaled a recovery in the economy.
Hmmmm...let's apply a few of the little grey cells to this:
Unemployment rate of full time career workers going up to 10.2% (for those of you in Rio Linda - they are getting FIRED), the real or "shadow" unemployment at 17%, and the retail holiday shopping season looming - whether it is good or not - need people to work the register.
Perhaps (just perhaps) the reason temps are getting hired is to pay someone $8 an hour to sub 20 hours a week for the person who made $40-50K working full time!?!?!? You think?
Perhaps they are hiring temps at minimum wage so they can dump them in January and they won't have to pay any benefits or insurance premiums for?
Nah!
It's a recovery all right! Pass the bourbon and the tanning butter - and crank up the gramaphone - we're going to party like it's 1929!!!
1. Balance sheet test--whether the value of the assets or enterprise value of the corporation exceeds its liabilities;
2. Cash flow test--whether the corporation has sufficient cash flow to meet its fixed financial obligations as they become due;
3. Unreasonably small capital test--whether the company has sufficient capital to obtain or support financing for future operations.
Regarding test #1, I have read a number of articles that show the real liabilities [accrual basis--not just current year "cash" basis liabilities] owed by the U.S. total approximately $250,000.00 to $300,000.00 for each U.S. citizen.
Regarding test #2, with interest rates at an unsustainably low level, I have read that the U.S. is paying approximately 25% of annual tax revenues towards interest due on outstanding U.S. indebtedness--these sames articles go on to state that within 10 years 100% of annual tax revenues will go towards the payment of interest on U.S. indebtedness. This assumes that taxes will not go up [an assumption that is difficult to make given that it is doubtful that the government will hold tax rates at a level that will pay for nothing more than interest on U.S. debt]. As such, how will the U.S. government continue to pay interest on its debt and pay all of its other liabilities [and don't say merely that the government will just "print more money" because hyperinflation will have a myriad of negative effects as well, such as leading to outsized CPI adjustments to the indexed liabilities owed by the government]
Test #3 leads one to conclude that with the expectation of lower tax collections [due to unemployment levels and recessionary issues], as well as the government's unwillingness and inability to raise taxes on all Americans to a level to support the ever-increasing federal debt service, in the not-too-distant future the creditors of the U.S. will conclude that the sole capital generating tool of the U.S. [the ability to levy taxes] is insufficient to justify the current [or then-existing] debt levels.
I will freely admit that it is difficult to quantify the asset side of the U.S. balance sheet, however, since there is no forum in which to administer the bankruptcy of a country, there is no reason to engage in that exercise. The issue that we need to concern ourselves with is whether or not the U.S. is solvent, and I say no. Yes, the country is awash in liquidity, but the liquidity is merely masking the insolvency and delaying the inevitable repercussions to be dealt with at another point in time in the future. The government is deceiving the populace, and it is the deception that I find most upsetting. A republic is not supposed to operate in a manner that deceives its citizens--it is counter to the constitution's mandates that the government should "by the people . . . . for the people." The U.S. government stopped being run "by the people" some time ago. Now that the politicos and special interests are running the government, you are finally starting to see that the government is no longer "for the people" either.
The upshot is that if you care to preserve whatever wealth you have been fortunate enough to accumulate up to this point in time, you have to realize that assets located within the U.S. [or assets located within banks guaranteed by the U.S. government, assets valued in U.S. Dollars, etc.] may not be where you want the bulk of your wealth to be invested.
On Nov 09 07:20 AM bbro wrote:
> How are we technically bankrupt??? Don't quote Debt to GDP that<br/>is
> confusing apples and oranges....Debt is a balance sheet issue....
>
> What are the US Assets????
> Do you think of your mortgage as income??? Or do you think about
> the debt payment???
>
> On Nov 08 09:04 PM TraderMark wrote:
$39K per citizen
$110K per taxpayer (babies don't earn income but we can still borrow against them)
Unfunded US liabilities
$344K per citizen
Which would take it well over $1 million per taxpayer
www.usdebtclock.org/
But don't worry, we'll grow out of it and as long as you sell all of America's assets to China we're good for the money.
Just ask bbro.
I don't know how it is figured but the site adds small biz assets + corporate assets + household assets. I assume some of these are from Federal Reserve data.
If you believe in that data essentially the math is
$241K in assets per citizen
vs
$344K in unfunded liabilities + $39K in national debt = $383K in liabilities
Put another way every American citizen from the moment they are born is underwater by $140,000 and it grows by the second.
Again, don't worry about it... as long as one puts their head in the sand it all goes away.
Now, where is that next stimulus?
thats another $54k, which includes mortgage debt, credit card debt, and personal debt
So instead of being $140k under water let's just round it to $200K underwater... that includes babies.
Boo Yah.