Seeking Alpha

UE rate dives as 806K exit labor force

  • In addition to April's job gain of 288K vs. 210K expected, revisions to February and March add another 36K jobs.
  • The big decline in headline unemployment to 6.3% from 6.7% comes as the labor force participation rate slides to 62.8% from 63.2% - the labor force as measured by the BLS fell 806K last month.
  • The broader U-6 unemployment rate falls to 12.3% from 12.7%. One year ago, it was 13.9%.
  • The average workweek is unchanged at 34.5 hours and average hourly earnings is also unchanged at $24.31.
  • Treasury prices quickly give back yesterday's large gains, the 10-year yield rising five basis points to 2.67%. TLT -0.6% premarket
  • Stock index futures (SPY) spiked higher as the number was released, but are only marginally in the green at this point.
  • The dollar (UUP, UDN) is higher across the board, and gold slips about $10 per ounce following the number, now -0.3% at $1,280. GLD -0.5%
  • ETFs: TBT, TLT, TMV, TBF, EDV, TTT, TMF, ZROZ, SBND, TLH, DLBS, VGLT, UBT, TLO, TENZ, LBND, TYBS, DLBL
Comments (43)
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    "The broader U-6 unemployment rate falls to 12.3% from 12.7%. One year ago, it was 13.9%."

     

    That's like saying $55 billion of QE is good when it was $85 billion of QE. The numbers still show weakness or we wouldn't need QE.

     

    Any excuse to knock gold down of course.
    2 May, 08:54 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (3322) | Send Message
     
    They should have moderated their lie. It's perfectly obvious that we didn't add anywhere near 288K jobs last month. If we had, there wouldn't have been so many discouraged workers dropping out of the workforce! They will have to pull that number down next month and the month following by at least 40K jobs, probably more like 50K or 60K.

     

    Note also that the average workweek is unchanged at 34.5 hours and average hourly earnings is also unchanged at $24.31. These are not results consistent with a large number of jobs being added to the economy. Companies only add jobs after they cannot increase hours (including overtime) of their existing staff.
    2 May, 12:36 PM Reply Like
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    WSJ article on aging labor and participation rate:

     

    By
    Lauren Weber

     

    http://on.wsj.com/1lGUuNK

     

    The unemployment rate remains stubbornly high and millions of Americans are looking for work. So is it really time to start worrying about labor shortages?

     

    That’s the view of economists at the Conference Board, who argue in a new paper that the United States will soon enter a period of prolonged labor shortages that could drive the unemployment rate down to 3.8% or less in the next 15 years, lower than at any time since the 1960s. The current unemployment rate is 6.7%.

     

    As the retirement of baby boomers accelerates—nearly all these Americans born between 1946 and 1964 will leave the workforce by 2030, multiple forecasts predict—the labor force will contract, especially in occupations that currently employ a disproportionate number of older workers.

     

    Industries likely to see significant worker shortages include rail transportation, plant operations and law enforcement, according to authors Gad Levanon and Ben Cheng. On the other hand, STEM (science, technology, engineering and math) professions will be insulated from the brunt of this trend because large shares of those workers are young immigrants, they write.

     

    Unemployment will return to its “natural rate” of 5.5% by the end of 2015, the authors write.

     

    That seems like good news at first glance, especially for those who are out of work and eager to earn a paycheck, but there are darker elements to it.
    2 May, 08:58 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    Of course the assumption here is that by age default (the fact that boomers reach retirement age) that they are "prepared" financially for retirement.

     

    That's a leap of faith if I ever heard one.

     

    Boomers working to stay employed during golden years

     

    http://usat.ly/1iKYiIr
    2 May, 09:15 AM Reply Like
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    doug,

     

    This year marks the first year when 300K boomers turn 67 monthly. A small percentage of them will work but vast majority would retire for all sorts of reasons with health issues at the top. At the same time, a small percentage of those under 67 will leave the work force, particularly women in dual income households to take care of their young children or aging parents.

     

    Of course, best to have jobs for older folks who cannot see, walk or remember names ... they call them volunteer jobs.
    2 May, 09:24 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    SivBum....I just report what the data and polls say.

     

    Nice to speculate though. And hope.

     

    Afford to Retire? More are Confident, But Few Save Enough http://bit.ly/1lH30wo

     

    28% Of Those Think Current Planning Efforts Will Be Sufficient http://bit.ly/1lH31Aq

     

    Baby Boomers: Poorer in Old Age Than Their Parents

     

    http://yhoo.it/1lH30ws
    2 May, 09:37 AM Reply Like
  • notta lackey
    , contributor
    Comments (131) | Send Message
     
    Most boomers have not prepared. The ones that did got clobbered by their falling stock or house prices. They will have to work longer than expected.

     

    Dont forget that FDR established social security to get the old folks to quit and alleviate unemployment. What are they going to use this time?
    2 May, 09:48 AM Reply Like
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    doug,

     

    Agree with those citations. However, you cannot ignore the factors I had listed as well.

     

    Plainly, would you hire unemployed 67 year olds to fill your job openings?
    2 May, 10:07 AM Reply Like
  • Doug Eberhardt
    , contributor
    Comments (2727) | Send Message
     
    Hell yes I would. They probably have more smarts than many of the kids graduating college.

     

    I'm 55 years old. My Dad is 80 and my Mom 78. I would hire both. My Dad still trades (former CBOT member).

     

    I don't put people out to pasture, lol.

     

    (we lived on a farm too and farmers don't retire either...till forced to...they love what they do)
    2 May, 10:28 AM Reply Like
  • dcranes@cox.net
    , contributor
    Comments (137) | Send Message
     
    Yes, darker is the idea that we will have huge social expenses from an old unproductive and living longer, sick population. And, at the same time we will have a decreased work force and full employment. There is an obvious crunch in there. This has been observed-monitored-for twenty years. It is a cliff and we will have to do all of the above perfectly-I mean A,B,C, & D.
    It looks like the next generation needs a miracle of new productive outpouring in order to stay ' in debt but making the bills-just.' My wife and I have had a few years where we didn't budget and we don't have many bills. That is an important accumulation period. Things can get pretty grim when there is never an absence of debt. dlc
    3 May, 11:35 PM Reply Like
  • dcranes@cox.net
    , contributor
    Comments (137) | Send Message
     
    DE That is another way to say: America has experienced wage deflation for quite a while. There may also be added stupidity and relying on a promise by an agency (US Government) which pretty much gets everything wrong. The numbers are pitifully inadequate for any expectation of a positive life style for the next generation. dlc
    3 May, 11:45 PM Reply Like
  • andrewtoney
    , contributor
    Comments (99) | Send Message
     
    Us labor force partecipation rate at lows since late '70s.806k leaving labore force:Fed needs to give up tapering immediately.
    2 May, 09:04 AM Reply Like
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    andrew,

     

    In the 70's plenty of women did not enter into the work force until the DING era which boosted the labor participation rate until peaking on year 2000. Suggest you to peruse the United States Labor Force Participation Rate by gender 1948-2011 from bls. Here is a chart:

     

    http://bit.ly/1iLba1g
    2 May, 10:16 AM Reply Like
  • andrewtoney
    , contributor
    Comments (99) | Send Message
     
    Thanks.
    2 May, 02:24 PM Reply Like
  • jhooper
    , contributor
    Comments (5368) | Send Message
     
    This is a nice link too.

     

    http://1.usa.gov/11xOOIS
    2 May, 03:27 PM Reply Like
  • andrewtoney
    , contributor
    Comments (99) | Send Message
     
    Thanks jhooper
    3 May, 01:22 PM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2427) | Send Message
     
    Don't feel sorry for us boomers. We have had an entire lifetime to prepare for retirement, just like anyone else. It will be a touch and go for me; but I should be able to swing it.
    2 May, 09:20 AM Reply Like
  • dcranes@cox.net
    , contributor
    Comments (137) | Send Message
     
    Well, I'm 67 and retired but busy improving my land. It's not the baby boomers I'm worried about. It's the declining world population, slowing production, hugely increased debt and the poor dumb suckers that are going to vote for a bigger and ever bigger government that will keep them heavily indebted their whole life. It reminds me of the Persian Empire-only world-wide. A few wealthy and terrible hordes of worker ants. We think we are free and informed but as a people, we are casting the chains for our children's necks with our me me more more attitudes. By debt I don't mean the trifling 17+trillions we owe interest on. I mean the 2-300 trillions we have promised to old people and the man in the moon....dlc
    3 May, 11:58 PM Reply Like
  • bbro
    , contributor
    Comments (9344) | Send Message
     
    4 leading indicators inside the jobs numbers indicate no recession on the horizon....
    2 May, 09:26 AM Reply Like
  • TimmiesRegular
    , contributor
    Comments (879) | Send Message
     
    The report said "job gains". No need to worry about boomers because many want to work part time. 70 is the new 60. It's still hard for young people to get meaningful work - 85% of university grads don't work in their field of study, so we need job gains and they are coming slowly (finally?).
    2 May, 09:36 AM Reply Like
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    That's why the STEM program is essential. Every year, we imported 50K or more, 85K this year, H1B workers in high tech jobs. And every year, our universities churn out more and more BAs in social sciences and history, but never enough STEM grads. STEM grads are not even mentioned in this survey except in PhD level (no doubt many foreign students to enhance H1B status):

     

    Question:
    What are the most popular majors for postsecondary students?

     

    Response:
    Of the 1,716,000 bachelor's degrees conferred in 2010–11, the greatest numbers of degrees were conferred in the fields of business (365,000), social sciences and history (177,000), health professions and related programs (143,000), education (104,000), and psychology (101,000). At the master's degree level, the greatest numbers of degrees were conferred in the fields of business (187,000) and education (185,000). At the doctor's degree level, the greatest numbers of degrees were conferred in the fields of health professions and related programs (60,200), legal professions and studies (44,900), education (9,600), engineering (8,400), biological and biomedical sciences (7,700), psychology (5,900), and physical sciences and science technologies (5,300).

     

    http://1.usa.gov/1iLhF4b
    2 May, 10:45 AM Reply Like
  • travis26
    , contributor
    Comments (14) | Send Message
     
    It said in the report that you linked to that for 2011-2012, 16.0% of degrees were in natural sciences, mathematics, engineering, and computer science combined. 16.5% were in humanities, 16.1% social sciences, 5.9% education, 20.5% business, and 25% other. I guess that it's a good thing I'll be majoring in electrical engineering. I think that a lot of students don't realize how much worse the job prospects are for the most popular degrees, or they think that they will be the exceptions to the rule and they'll beat the odds. I was looking at the employment report for my college and even the best job offer a graduate got for social sciences and liberal arts was less than the average for electrical engineering or computer science. The market makes it very clear that there is much more demand for engineering than social sciences such as psychology.
    2 May, 05:15 PM Reply Like
  • JohnBinTN
    , contributor
    Comments (3591) | Send Message
     
    Not everyone can excel in mathematics. I had a heckuva time with a class called "Electromagnetism" (300-level physics), so I stopped pursuing physics as a major.

     

    Do I regret getting my degree in English? Absolutely not. I needed two more semesters, and I could have taught English, math, and computer science. Retail snatched me before I re-upped for another year in school. And that's fine - my life turned out pretty good.
    2 May, 06:14 PM Reply Like
  • rvshaw
    , contributor
    Comments (90) | Send Message
     
    The last time the unemployment rate dropped like this it was 2 months before an election. Here we are 6 months before another election with Democrats in big trouble and voila, the rate drops big! With Obama using Chicago-style thuggery politics, you cannot believe anything that comes out of a government office.
    2 May, 10:38 AM Reply Like
  • jhooper
    , contributor
    Comments (5368) | Send Message
     
    Like the last time, when people were noting that Presidents don't win re-election with U3 over 8%, and a few months before the election it dropped to 7.9%.
    2 May, 10:46 AM Reply Like
  • MisterJ
    , contributor
    Comments (595) | Send Message
     
    Not to forget the landslide in Washington state that Pres. Obama also caused by Chicago-style thuggery. How about you go back to your ranch, Cliven?
    2 May, 03:34 PM Reply Like
  • jhooper
    , contributor
    Comments (5368) | Send Message
     
    Apparently its been confiscated for the ideology of the greater theft.
    2 May, 03:39 PM Reply Like
  • tomlos
    , contributor
    Comments (1099) | Send Message
     
    Change we can believe in! Now let's go raise taxes.
    2 May, 11:15 AM Reply Like
  • rvshaw
    , contributor
    Comments (90) | Send Message
     
    If anyone actually believed these numbers, the market wouldn't be down today.
    2 May, 11:29 AM Reply Like
  • notta lackey
    , contributor
    Comments (131) | Send Message
     
    Exactly.
    4 May, 09:56 PM Reply Like
  • alterami
    , contributor
    Comments (78) | Send Message
     
    Unemployed people give up looking, Obama claims victory, same old story.
    2 May, 12:00 PM Reply Like
  • rvshaw
    , contributor
    Comments (90) | Send Message
     
    It is a victory for Democrats! Those who quit looking for a job stay on the public dole and vote Democrat.
    2 May, 12:02 PM Reply Like
  • alterami
    , contributor
    Comments (78) | Send Message
     
    Just once I'd like to see the rate drop due to people finding jobs instead of unemployed people giving up, but I guess that's asking too much under this regime.
    2 May, 12:09 PM Reply Like
  • MisterJ
    , contributor
    Comments (595) | Send Message
     
    They would return to the labor force if business paid fair wages But that's probably only possible for CEOs under the current business regime.
    3 May, 03:49 PM Reply Like
  • jhooper
    , contributor
    Comments (5368) | Send Message
     
    "But that's probably only possible for CEOs under the current business regime. "

     

    Well of course. That's the point of giving the regime piles of Fed notes. That way the regime protects your turf with taxes and regulations that keep out competitors, thus leaving you secure so you can compensate yourself. This has been going on since Jean Baptiste Colbert.
    3 May, 04:29 PM Reply Like
  • dcranes@cox.net
    , contributor
    Comments (137) | Send Message
     
    Mr. J: you said:' They would return to the labor force if business paid fair wages But that's probably only possible for CEOs under the current business regime'

     

    You mean the regime of crony capitalism fed by trillions of fiat money?
    You mean the monopoly corporations created by federal regulations and special tax dispensations? You mean the business regime of huge govt. monies pouring into wealthy hands via the Federal Reserve? Or perhaps you mean the corpse of our free market made to crumble for the benefit of a few, well connected to government spigots? Small business and the work force are systematically destroyed by the income tax and increasing regulations, so I guess you don't mean that regime.

     

    By the way: In a free market wages are maintained by natural processes like supply and demand. If there is a shrinking labor force that is probably because there is less demand. It is the small business that hires the most worker for the buck. Since the small business is being destroyed, since self employment is made harder and less worthwhile, there are fewer small businesses to hire those unemployed, at a decent wage.

     

    Perhaps that is not unintentional since the unemployed turn to social programs and make a dependable vote for the progressive ideal society. The destruction of the small business certainly looks intentional. It's probably no accident that the burdens only increase, that food stamp and unemployment use only increases.

     

    The question is: Do we want a productive population or a horde of welfare slaves monitored by a smaller horde of bureaucrats? Small business and a population of owners, made this nation great. It is the 16th amendment and the Federal Reserve that is destroying it. dlc
    4 May, 03:25 PM Reply Like
  • jhooper
    , contributor
    Comments (5368) | Send Message
     
    dcranes

     

    I vigorously disagree with this statement.

     

    "crony capitalism fed by trillions of fiat money"

     

    It's called crony socialism.

     

    The rest seems to infer you are a student of history and reality.
    4 May, 03:31 PM Reply Like
  • notta lackey
    , contributor
    Comments (131) | Send Message
     
    Don't forget to add the illegal Hispanics who don't have to show ID at the polls so we can build a dole coalition.
    4 May, 09:59 PM Reply Like
  • notta lackey
    , contributor
    Comments (131) | Send Message
     
    No, it is crony capitalism. The capitalists wisely co-opted the word decades ago. What produces jobs is work which, as any economist will tell you, is the production of goods or services. What made this country great was, therefore, "mercantilism" or "entrepreneurism" etc., but those names were subordinated into the false name capitalism. Now "Capitalism" has arrived. No goods, no services, just frenzied trading and migration of capital.

     

    Controlling the definitional words controls the debate, just like "queers" and "perverts" and "homosexuals" are now dishonestly called "gay". When I was a kid I was "gay", because then it meant "happy" and "carefree". Now it means a pervert, and, is grossly dishonest, as I have never met a "gay" gay. The same prevails when Wall Street calls successful business risk-takers "capitalists".
    4 May, 10:07 PM Reply Like
  • dcranes@cox.net
    , contributor
    Comments (137) | Send Message
     
    JH: Well you are correct and incorrect, I Think: It is called crony capitalism but it is crony socialism. In fact capitalism in a free market is precisely the absence of cronyism and external controls. But, Capitalism has acquired a smear so I use Free Market as Mr. H. Desoto suggests. You also seem fond of history. dlc
    4 May, 10:37 PM Reply Like
  • dcranes@cox.net
    , contributor
    Comments (137) | Send Message
     
    Hi: This is the smear I was talking about. Better we should use the term Free Market which is more to the point. Free Markets are opposed by markets of coercion-such as cronyism, regulations that treat unequally, fiat monies in crony hands and lottsa inflation. Thanks to Mr. Marx, Capitalism is a perverse word that only slightly resembles reality.

     

    By using 'Free Markets" we will get a few years of use before socialist redefinition catches up to common usage. dlc
    4 May, 10:45 PM Reply Like
  • fred1724
    , contributor
    Comments (63) | Send Message
     
    The unemployment rate they sell is just as n much a lie as the CPI.
    2 May, 02:45 PM Reply Like
  • BruceInKY
    , contributor
    Comments (407) | Send Message
     
    Ignorance is Strength. Labor is Unfair. Forward!
    3 May, 12:42 AM Reply Like
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